Sale of Satyam promoters’ stake by lenders feared

December 29th, 2008 - 6:29 pm ICT by IANS  

Bangalore, Dec 29 (IANS) The minority holding of promoters in Satyam Computer Services is feared to have been diluted by institutional lenders with which the shares were pledged through a holding firm, the IT bellwether said Monday.“The promoters had pledged their shares with institutional lenders through SRSR Holding Ltd in September 2006. Their holding would have been diluted if the lenders had exercised the option to liquidate the pledged shares,” the Hyderabad-based company said in a statement.

The promoters, including Satyam founder-chairman B. Ramalinga Raju and his family members, hold a minority stake of 8.61 percent in the company.

SRSR Holding is a family-owned investment firm floated by the Raju family to leverage the shares held by them in Satyam and other firms in which they have invested or invest. Other firms include the two realty firms - Maytas Properties and Maytas Infra - partly owned and run by Raju’s two sons, Rama Raju and Tej Raju.

Foreign institutional investors (FIIs) collectively have a majority stake with 48.22 percent of the total equity, while Indian financial institutions (FIs) hold 12.91 percent. Others, including retail investors, own the remaining 30.38 percent of the equity.

Earlier, the listed firm informed the Bombay Stock Exchange (BSE) that some of the lenders may have exercised their option to liquidate a portion of the mortgaged shares to cover their margin call.

A margin call is a call from a broker to an investor demanding cash deposit to purchase or short-sell securities, or cover an adverse price movement in the shares held by the latter but pledged with the broker as a collateral security.

In the case of Satyam promoters’ shares, analysts say at least two institutional lenders would have dumped the mortgaged shares in the market to protect their margins from the price at which the shares were held by them.

Since the top management’s aborted bid Dec 16 to buy the two realty firms for $1.6 billion (Rs.79.2 billion), Satyam’s share price has plunged by about 35 percent from Rs.226.50 (Dec 16) to Rs.148.25 Monday.

In a related development, the company has rescheduled the board meeting from Monday (Dec 29) to Jan 10 to consider, among others, a proposal to buy back shares by the promoters, ostensibly to resist a hostile takeover by the majority-holding investors and change of the top management.

Raju has also asked the board to include the possible dilution of the promoters’ holding in the company in the agenda for consideration at the Jan 10 meeting.

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