Past takeovers now plague Satyam Computers

While the company has been served legal notices in some cases, claims have also been sought from Satyam in a few of these disputes. These are related to acquisitions of US-based Caterpillar’s Market Research & Customer Analytics business unit, Chicago-based strategy and general management consulting firm Bridge Strategy Group LLC, Belgium-based supply chain management consultancy firm S&V Management Consultants as also purchase of 50 per cent stake in a JV with Venture Global Engineering LLC.

Following disclosure of fraud in January, Caterpillar served legal notice on Satyam notifying termination of its agreements and demanding immediate payment of unpaid principal balance of US$40 million due under the promissory note.

Another acquisition of Bridge Strategy Group was announced on January 21, 2008 for US$35 million to be paid over two and half years. The transaction was consummated on April 4, 2008 and an initial payment of US$19 million was made on that day.

Good reason

The balance payments were to be paid in two stages — US$8 million in August 2009 as guaranteed payment and another US$8 million in October 2010 as key executive retention payment. Again after fraud disclosure, the sellers, all key executives of Bridge, served notice on Satyam claiming that they had a “Good Reason” under the share purchase agreement to leave Bridge and still retain all rights to receive full balance of consideration, totalling about US$16 million.  Another case involves acquisition of S&V Management Consultants, announced on April 21, 2008, for Euro 22.5 million comprising up-front, deferred guaranteed and deferred retention payments. 

The transaction was consummated on December 11, 2008 and initial payment of Euro 11.7 million made that day. A subsequent payment of Euro 3 million was made by Satyam on April 30, 2009.  The sellers, however, on February 9, 2009, served notices on Satyam asking for guarantees for all future payments owed under the acquisition agreement.

The sellers were also asking Satyam to pay approximately 1 million euro in past due payments, which were supposed to be met from S&V’s own business cash flows and reserves, but were delayed due to a delay in the collection of S&V’s receivables. Satyam is in the process of paying Euro 1 million in past due payments.

In the fourth deal, involving purchase of VGE’s 50 per cent interest in a JV, Satyam said it “believes that this will not have an adverse effect on results of operations, financial position and cash flows.”

Tata AIG disputes claims

Further, in India, Tata AIG, in its preliminary view has disputed the claim sent by Satyam under its Directors & Officers Liability Policy (D&O Policy), subject to company providing additional documentation and information. Tata AIG has sought additional documentation and information. Satyam, which initially expressed its disagreement, agreed to furnish additional details.

ED revists firm’s role in Parekh scam

New Delhi, pti: The government has said that the Enforcement Directorate is looking afresh into the possible involvement of Satyam Computers in the multi-crore Ketan Parekh securities scam.

In view of the recent developments in Satyam Computer, the Action Taken Report (ATR) on recommendations of JPC on the stock scam tabled in Parliament on Tuesday said, “the matter is being looked into afresh” by the Enforcement Directorate.

Tech Mahindra taps Rs 550 cr to fund acquisition

New York, pti: Tech Mahindra has raised Rs 550 crore from Tata Capital and IDFC to fund its takeover of Satyam Computer.

The software firm raised these funds by issuing debentures which are convertible into shares of Venturbay Consultants, through which it acquired Satyam Computer.

Besides, it has borrowed Rs 1,450 crore from various banks, mutual funds, institutions and NBFCs at an interest rate of 10 per cent, part of which has been used for funding the acquisition of SatyamComputer Services.