iGATE to buyback Patni Comp shares at Rs 520 per share

 iGATE Corporation, on Monday, announced that that it has accepted the price of Rs 520 per share for delisting its subsidiary Patni Computer Systems, determined through a reverse book building process of BSE.

 The public shareholders, holding equity shares of the company were invited to submit bids via an offer that opened on March 28, 2012 and closed on March 30, 2012. This price is 3.2 per cent higher than the price at which it had bought majority stake in Patni at Rs 503.50 per share for a total deal value of Rs 5,560 crore in January 2011. For the purpose of share buyback, iGATE has taken a loan of $265 million from Singapore-based DBS Bank and has also pooled in the $7 million cash from itself taking the total to $272 million.

 “After our Q4 results and some corporate restructuring, the loan amount was increased from $215 million,” said iGATE CEO Phaneesh Murthy. The company has already received 60 per cent of the shares and expects the rest to come within the next one year at the discovered price.

The delisting will bring them closer to the merger and their plan to integrate the companies into a single entity. The marketing team is already evaluating the re-branding initiative,  Murthy further added.  The company said there can be no exact date as to when this process will end; however, the entire process would probably take another two to three weeks time. It added that, at present, it has cash worth $435 million which it would use to reduce its debt that crosses $1 billion now, taking into account it’s debt of high-yielding bonds of $770 million taken in 2011.

 “With the front-end and shared services successfully integrated, we are confident that from here on, we will be able to integrate our delivery operations fully.

The successful delisting will also set up well for a possible downstream merger while also reducing costs of compliance and governance,” said iGATE CFO, Sujit Sircar.