Industry: Information technology
Satyam Computer Services today announced that it allotted 300.27 million shares (31 per cent of the share capital) to Venturbay Consultants, a subsidiary controlled by Tech Mahindra, which outbid rivals in the race to acquire a controlling stake in tainted Satyam Computer.
Venturbay had on April 20 deposited into an escrow account Rs 1,756 crore (about $351 million), the subscription amount for the shares. Conditions precedent to the allotment of the initial shares have now been satisfied by the parties and the funds have been released from the escrow to Satyam’s account.
Satyam expects to use these funds for general corporate purposes including repayment of certain existing loans, according to a release from Satyam.
As per the Sebi (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, Venturbay would be required to make a mandatory cash tender offer to acquire an additional minimum of 20 per cent of the enhanced share capital and convertible instruments at a minimum price of Rs 58 per share.
Tech Mahindra proposed to acquire 199 million shares of Satyam, representing 20 per cent of the fully diluted share capital of the company. The open offer would begin on June 12 and close on July 1, 2009. The maximum consideration payable under the open offer was Rs 1,154.66 crore.
Venturbay would have an option to subscribe to additional newly issued shares of Satyam if it acquired less than 51 per cent of the shares through the preferential allotment and public offer. The initial and additional shares acquired by Venturbay would be locked-in for three years from the date of allotment.
The government-appointed board of Satyam had given its approval for the acquisition of a 31 per cent stake by Tech Mahindra for Rs 1,756 crore. The deal has also been approved by the Company Law Board. The company has already deposited Rs 2,910 crore in an escrow account for a 51 per cent controlling stake in Satyam.
In connection with the contemplated public offer, Satyam said it expected to file a solicitation/recommendation statement on Schedule 14D-9 with the United States Securities and Exchange Commission for information to investors, shareholders and holders of the company’s American Depositary Shares. The Schedule 14D-9 would also be available on the company’s website at www.satyam.com.