Even as the crucial meeting of the new board of Satyam Computer Services gets under way on Monday, when officials of its new owner Tech Mahindra will meet the Satyam management, a government official has clarified that the six government-nominated board members will step down only after the Company Law Board is satisfied that the company is stable.
This means Tech Mahindra, which has won the race to buy the fraud-hit company, may not get management control of the IT outsourcing company even after it acquires a majority stake. ''The company has to submit periodical reports to the CLB on its functioning. Based on these updates, the CLB will take a view when the government-appointed directors can step down,'' an unnamed official of the ministry of corporate affairs was quoted as saying by a newspaper.
CLB last week allowed Tech Mahindra to nominate four members on Satyam board after depositing cash for acquiring 51 per cent of the company in escrow accounts. The ministry official reportedly said it would take time before CLB is satisfied that the troubled company, which saw India's biggest corporate scam.
After the completion of the sale process to Tech Mahindra's subsidiary Venturebay, the CLB will assess whether lenders to the company as well as the clients are happy with Satyam's operations before full management control is accorded to Tech Mahindra.
Meanwhile, Tech Mahindra has reportedly raised Rs600 crore through non-convertible debentures to pay for the acquisition of Satyam. To complete its acquisition, the company has undertaken to pay Rs1756 crore before Tuesday to acquire a 31-per cent stake in Satyam. It also has to deposit the remaining cash (around Rs11,14.4 crore) for the 20-per cent open offer in an escrow account.
Tech Mahindra had earlier raised Rs275 crore from the sale of one-year commercial paper, primarily to mutual funds. LIC, Birla Sun Life Insurance and Kotak Life Insurance are among the eight entities that will subscribe to the non-convertible debentures and commercial paper.
The company is also in talks with banks for bridge loans worth Rs1,000 crore, and another Rs1,000 crore will come from the internal accruals of Tech Mahindra, reports say.