SATYAM MAY LOOK FOR BUYER
Board to appoint i-bankers to explore option, find new owner Javed Sayed MUMBAI THE newly-appointed board of Satyam Computer Services is set to appoint two to three investment bankers to explore the possibility of finding a new owner for the troubled software company. The names of Goldman Sachs, JP Morgan and Deutsche Bank are under consideration, and a final decision is likely this week, people familiar with the development told ET. The six-member board, which met in Hyderabad on Saturday, has also decided to talk directly to Satyam's big overseas clients to hear their concerns and address their fears in the wake of the scandal that has engulfed the company. The fraud has created uncertainty not just among investors and employees, but also among vendors and clients. The board members have divided key clients such as GE, Scotia Bank, Amex, Fidelity, Citi, BP and Bank of America among themselves and will begin calling them up individually from Monday. The directors have further decided that in addition to a weekly board meeting, they will take turns to spend time at the Satyam campus in Hyderabad to reassure employees and ensure stability. * Satyam's new board looks outside for a CEO, appoints search firm * THE new board has also appointed search firm Egon Zehnder to help identify a CEO for the company, a person familiar with the situation said. Earlier this month, the government sacked the board appointed by Satyam's ex-chairman and founder B Ramalinga Raju and appointed a three-member board in its place. Last week, three more directors were inducted. The board now comprises HDFC chairman Deepak Parekh, CII chief mentor Tarun Das, former Nasscom president Kiran Karnik, Securities Appellate Tribunal's former presiding officer C Achuthan, ICAI former president T Manoharan, and LIC's S Balakrishnan. According to people familiar with the development, Indian companies, MNCs, and large private equity funds have expressed interest in the troubled software company and the M&A option has been discussed by the board members. Of course, any buyout or merger will require the consent of the major investors in the company. "A buyout or merger option, if it is feasible, could be attractive. The other possibility, a government bailout, is not easy in India," said a banker with knowledge of the development. The board is keen to appoint more than one investment banker to ensure transparency in the valuation and due diligence process, added this person. While the names of companies such as HCL Technologies and Tech Mahindra had been mentioned as potential buyers, the ardour of some of them had dimmed after Mr Raju, earlier this month, confessed to inflating the profits and cash reserves position of the company, triggering his arrest and apprehensions of large-scale fund diversion in the company. Further, the fact that Satyam is likely to face class action cases in the US, may deter some potential buyers. There is also an ongoing litigation with Upaid, a UK-based provider of mobile payment software. But, according to at least two persons, some "Indian companies of repute" continue to find Satyam an attractive proposition. The possibility of separately selling Satyam BPO, the Punebased subsidiary of Satyam Computer Services, is also being considered. While corporate affairs minister PC Gupta has been quoted as saying that an internal candidate would be better suited for the position, the board members don't agree with this view and are only looking at external candidates. The board, in its meeting on Saturday, discussed the names of several people who have expressed interest in the job and also suggested some new names. "The heads of several IT firms have shown interest in the CEO's post. This is encouraging as this shows that people have faith in Satyam," said a person close to the board members. Interestingly, it is learnt that Wipro's former vice-chairman Vivek Paul, whose name had been touted as a possible candidate, did not figure in the list of names that was discussed. Meanwhile, people with knowledge of the situation, said Satyam's financial position is not as bad as was initially apprehended. The company needs Rs 500 crore in the near term to pay vendors, employees and clear other outstandings. It has receivables of Rs 1,700 crore and audit firm KPMG, which has been recently appointed to review and restate the company's accounts, has begun the process of writing to customers and verifying the receivables amount from them. The responses so far indicate that the figure is genuine and the company should get this money. In addition, Satyam owns eight campuses in India, including a 130-acre campus at Hyderabad, and it should be able to raise money against these fixed assets. [email protected] --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en -~----------~----~----~----~------~----~------~--~---
