Spice’s Modi Makes $408 Million Offer for Control of Satyam

Your Ad Here

Jan. 30 (Bloomberg) -- B. K. Modi, who sold his stake in Spice Communications Ltd. to Idea Cellular Ltd., has offered to buy a 51 percent stake in Satyam Computer Services Ltd. for 20 billion rupees ($408 million), the Spice Corp. chairman said.

“We have sent a proposal to the board as well as the government,” Modi said today in a telephone interview from New Delhi. “Spice is in information, communication and entertainment and this aligns with our present business.”

Spice Innovation, Modi’s closely held New Delhi-based holding company, has offered the cash in exchange for preference shares from the Hyderabad-based Satyam, he said.

Satyam’s state-appointed board has hired Goldman Sachs Group Inc. and Avendus Capital Ltd. to find strategic investors or a buyer for the provider at the center of India’s largest corporate fraud inquiry as it seeks funds to pay salaries and run the business. It has yet to name a chief executive officer for the company three weeks after founder Ramalinga Raju was arrested.

“The key thing is that the money must go into the company,” Modi said. The 20 billion rupees is the amount Satyam needs to run its operations and “we have the money,” he said.

Satyam’s government-appointed directors said on Jan. 27 they had organized money to pay salaries for January and were set to complete funding arrangements for meeting the company’s immediate needs. The provider faces a severe cash crunch since Raju said Jan. 7 he’d inflated assets by $1 billion and quit as chairman.

The software company, which is being investigated by India’s fraud office, auditing body, markets regulator and police, also faces U.S. class-action lawsuits after Raju admitted to inflating earnings for “several years.”

Potential Buyers

Satyam has attracted interest from several potential buyers and the provider said Jan. 27 it has no plans to cede control to Larsen & Toubro Ltd. after the nation’s biggest engineering company tripled its stake to 12 percent. Chairman A.M. Naik said Larsen may lift its holding in Satyam to 15 percent, the threshold for an offer to investors under Indian takeover rules.

Modi said he plans to change Satyam’s brand name if he succeeds in acquiring the company and said Spice was familiar with regulations in the markets where Satyam operated and was prepared to deal with any legal action the provider may face.

“If we invest our main focus will be on how to revive the company and how to grow it,” he said. “We have our lawyers and we know how to deal with the lawsuits.”

source