Satyam Computer Services has said that Tech Mahindra, through its subsidiary Venturebay Consultants Pvt. Ltd, has deposited the cash for both the acquisition of 31% stake and subsequent open offer in seperate escrow accounts. Public offer for the 20% open offer will be made on Tuesday.
Since the funds have been submitted, Tech Mahindra can now appoint four nominees on the board of Satyam. The government appointed six directors will continue until further orders from Company Law Board.
The four Tech Mahindra representatives to join Satyam board are – Vineet Nayar, Vice Chairman and MD; CP Gurnani, President of International Operations; Sanjay Kalra, President of Strategic Initiatives; and Ulhas Yargop, Director at Tech Mahindra and President of IT sector, Mahindra Group. Tech Mahindra and Satyam also discussed the transition plan today.
Tech Mahindra, which will become a top tier IT firm after the deal, has deposited a total of Rs 2,910 crore in the escrow account for the acquisition of a controlling stake in Satyam. Tech Mahindra has deposited Rs 1,756 crore ($351 million) in one escrow account for acquisition for a 31% stake. This would be done through issue of fresh equity shares. It has deposited another Rs 1,154 crore ($231 million) for the open offer for the additional 20% stake.
Tech Mahindra has also said that Satyam will continue as a stand alone unit. Anand Mahindra, today addressed top 500 leaders at Satyam and has said that he could see a sense of palpable relief among the Satyam customers. Tech Mahindra is now on a lookout for a new CFO for Satyam and has said that it will name a new CFO in a few weeks.
Satyam’s board is now waiting for various regulatory approvals to go ahead with the issue, including the nod from market regulator Securities & Exchange Board of India (SEBI). It has already got the Company Law Board nod.
Tech Mahindra, in which British Telecom has a 30% stake, raised Rs 875 crore for the acquisition through issue of debt securities. It has issued Rs 600 crore worth of non-convertible debenture (NCD) and the Rs 275 crore commercial paper issues, which have been subscribed by a clutch of mutual funds, banks and insurance companies. In a press conference held today, M&M group CFO, Bharat Doshi said, “Tech Mahindra has a strong balance sheet and that has made this possible.”
The IT firm has around Rs 700 crore of internal accruals.The rest of the amount is being raised through debt. Kotak Mahindra is the banker to Tech Mahindra on the Satyam deal and was the sole lead manager to the debt issue.
Tech Mahindra board also expressed its concern over Satyam’s financial status saying that its first priority would be to restore Satyam’s financial health.
Vineet Nayar, vice chairman and MD, Tech Mahindra said, addressing all the Satyam shareholders, “Satyam is one company, the very existence of which was in question at point of time. The situation has now been stabilised and the company will prosper in the times to come.”