Satyam buyer may face three-year lock-in: Report

Mumbai: Beleaguered software firm Satyam Computer Services' government-appointed board is considering the option of imposing a three-year lock-in clause while making a preferential allotment to a strategic investor, a newspaper report said on Saturday.

The aim was to discourage frivolous buyers, the report in Economic Times said.

"One option is to have a three-year lock-in on 26 per cent of the preferential allotment of shares to be made to a strategic investor," the report said, quoting an unidentified source privy to the development.

Current regulations by markets watchdog Securities and Exchange Board of India (SEBI) stipulate a one-year lock in for preferential issues.

Satyam's board is meeting in Hyderabad during the day to discuss client and staff issues.

Later, the board will also meet with its investment bankers Goldman Sachs and Avendus Advisors to discuss options for a strategic investor in the company.

Satyam board member and veteran banker Deepak Parekh has said details and criteria for prospective bidders would be finalised next week.

On Thursday, India's Company Law Board approved a request from the software company to raise its authorised share base and induct a strategic investor.

In an order the Law Board said the induction of the strategic investor must be carried out through a competitive price bid auction and Satyam could issue preferential shares at par or at a premium.

Meanwhile, chairman of the government-appointed board, Kiran Karnik, was quoted in the Financial Express on Saturday as saying: "Irrespective of the number of suitors, we would certainly give some basic financial information to them."

But detailed information on the finances would not be given as re-stating the company accounts would take some time, the paper said.

Potential suitors that have declared an interest include India's top engineering and construction firm Larsen & Toubro, Spice Group and the Hinduja Group.

NYSE-listed Satyam has been struggling for survival since January 7 when its founder and chairman Ramalinga Raju quit after revealing that profits had been overstated for years and assets falsified.

More clients quit

Separately, the Economic Times paper said that Satyam's two major clients Coca-Cola and GlaxoSmithKline have exited the company.

The paper said outsourcer Cognizant Technology Solutions would get the $35 million GSK contract, while Capgemini has bagged the $100 million, seven-year Coca Cola project.

"We would not like to comment on individual clients," a spokesman for Cognizant said.

Last week, Cognizant's chief executive had said that it was in talks with a handful of Satyam's customers, who had approached them. The paper said Capgemini confirmed that it had bagged the order.