The Hindu Business Line : Satyam board okays sponsored ADS issue

SATYAM Computer Services has announced plans to issue sponsored American Depository Shares (ADS) against existing equity shares of the company expected to be valued at $360 million.

The board of directors, which met late last night (IST), decided that the size of the sponsored ADS issue should not exceed 30 million equity shares (equivalent to 15 million ADSs) including green shoe option, if any. This issue would amount to $360 million based on the closing price of ADS on the NYSE as of December 7. An extraordinary general meeting has been convened on January 7, to pursue this issue.

The Chairman of Satyam, Mr B. Ramalinga Raju, in a statement said, "Positive global trends towards offshoring have resulted in an enhanced interest in Indian IT companies. We believe the time is right to increase Satyam's float in the ADS market through sponsored ADS offering. This will bring us closer to achieving our objective of transitioning to a mainstream global IT services stock."

The Chief Financial Officer of Satyam, Mr Srinivas Vadlamani, said, "The sponsored ADS offering is a significant step for Satyam in value creation by improving liquidity in the ADS market, enhancing branding of the company and augmenting ownership amongst global tech investors."

Mr Srinivas told Business Line that this offer would be a win-win situation for Indian shareholders, the company as also potential foreign equity holders and large technology funds. "Not just that, we expect some global technology funds to participate in the issue and thereby expose the company to a larger analyst community. This would further indirectly enable the company in quest for larger customer acquisition. This commands a higher premium as witnessed in the case of Infosys Technologies."

The Satyam ADS now constitutes 10.6 per cent of the issued capital. Once this issue is completed, which is likely by March, subject to clearance from the Securities and Exchange Commission, the ADS will represent 20 per cent of the issued capital. .

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