When contacted, a Citigroup spokesperson declined to comment. L&T officials also refrained to offer any comments. Currently, no bidder has a clear picture about the assets and liabilities of Satyam since the board will be unable to present the re-stated accounts.
Under these circumstances, valuing Satyam could prove to be a challenge. “The biggest question right now is what is the sustainable value of Satyam considering the uncertainty of its liabilities,” said Vyapak Desai, who heads the litigation practice at the law firm Nishith Desai Associates.
On Wednesday, L&T chairman AM Naik had officially stated that the company was awaiting communication from the Satyam board. “We have to see the company’s documents before deciding on a valuation. We are as concerned as anyone else on the legal risks involved,” Mr Naik said. However, the company has so far invested Rs 650 crore for its 12% in Satyam at an average price of Rs 78 per share.
While, class action suits filed by US shareholders against Satyam management may not be a direct concern for the acquirer, the liabilities will have to be paid from Satyam’s funds. “US shareholders may not be able to join the acquiring company in the class action suits. The impact may be indirect as the liabilities will have to be paid off from Satyam’s funds, thus eroding the share value of the acquirer in Satyam,” said Mr Desai.
However, L&T has ruled out selling its stake in case of a dilution, as the board has proposed a preferential allotment of Satyam’s shares.
“There is no question of a sell out even if our stake gets diluted (due to preferential allotment) or even if we do not acquire the company. I am sure, whoever, comes in will increase its valuation and thereby raise the value of our own holding,” Mr Naik said.
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