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Satyam may go to open auction

The race to revive fraud-mauled Satyam Computer Services has hit a sensitive patch, with questions being raised on whether the bidding process will go as scheduled, though the government-appointed board announced modifications to signal that it was business as usual. Mahua Venkatesh reports.

business Updated: Apr 02, 2009 22:37 IST
Mahua Venkatesh

The race to revive fraud-mauled Satyam Computer Services has hit a sensitive patch, with questions being raised on whether the bidding process will go as scheduled, though the government-appointed board announced modifications on Thursday to signal that it was business as usual.

Employees, customers and lenders of the ailing firm are worried, with a few prospective suitors withdrawing from the race.

Reports of an exodus of employees —the vital assets for a knowledge-driven company — is not doing good to issues related to valuations already hit by sagging interest.

Sources close to the development said that one of the bidding companies may move the court on the issue, which could force the board to restart the process.

Legal firm Hammurabi and Solomon’s managing partner Manoj Kumar said that the bidding process may take even six to eight months to close in case any of these companies took the matter to court.

“In case the matter is taken to court, the entire process would have to restart and this could drag the process with the new government expected to take over in June,” Kumar said.

However, in a filing with the stock exchanges on Thursday, the Satyam Board said that if there is not a single financial bid which is at least 90 per cent of the highest bid, then the highest bidder would be declared the successful bidder.

The highest bid will be treated as the floor price if there is more than one financial bid that is at least 90 per cent of the highest bid and an open auction will be conducted thereafter.

Tech Mahindra and Larsen and Toubro are among the few which have opted to remain in the last leg of the race while others have withdrawn on grounds of lack of transparency. There is widespread talk of global giant IBM as the rescuer, though there is no confirmation.