Decks have been cleared for the sale of a 51 per cent stake in scam-scarred Satyam Computers with the company receiving Securities and Exchange Board of India's (SEBI) approval for a global competitive bidding process.
Among the criteria specified for the bidders are a minimum asset base of $150 million and a three-year lock-in period for the controlling stake. This has been done to dissuade frivolous bidding.
The company’s shares jumped nearly 20 per cent and closed at Rs 42.1 on Friday.
The strategic sale process, which will begin shortly, will be completed in two phases. In the first phase the selected investor would acquire newly issued equity shares representing 31 percent of Satyam's share capital.
In the subsequent phase it will make a mandatory minimum public open offer to buy a further 20 percent stake, a company statement issued on Friday said.
The open offer will have to be made at the same share price as the price paid by the investor. If the open offer is undersubscribed, the company can issue more shares to take the controlling stake to 51 per cent.
“The investors will not be permitted to sell any equity shares acquire for a period of three years,” the statement said.
Satyam said details of the bidding process will be made public soon, marking the first steps of the country’s fourth largest software services company towards normalisation of operations after it found itself mired in a web of financial irregularities.
The irregularities came to light after its founder chairman B.Ramalinga Raju confessed in January that company’s accounts were doctored for several years.
A six-member government appointed board, headed by information technology veteran Kiran Karnik, had approached the Company Law Board (CLB) to raise the firm’s authorised share capital from Rs 160 crore to Rs 280 crore.
The CLB had granted the approval last month and made it clear in the order that the process of selection should be “transparent and open” and should be overseen by a retired Supreme Court Judge or a former Chief Justice of India.