Financial Daily from THE HINDU group of publications
Friday, May 27, 2005
Financial Daily from THE HINDU group of publications Friday, May 27, 2005 |
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Info-Tech
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Software Satyam plans $50 m capex in fiscal 2006 V. Rishi Kumar
Hyderabad , May 26 SATYAM Computer Services Ltd, the IT services provider, has projected a $50 million in capital expenditure for the financial year 2006. The Satyam management expects to deploy this amount principally to finance construction of new facilities in its offshore centres in India and to establish offsite centres in overseas locations, according to the company's latest filing made with the Securities Exchange Commission following its fourth quarter and annual results. It may be recalled that the company last year had filed for capex of $35 million. In its statement to the SEC, the company has said that its existing cash and cash equivalents and funds generated from operations will be sufficient to meet the total capex requirements. However, the company may alter the proposed capex plan depending on contingencies. In a statement related to Nipuna, its business process outsourcing services subsidiary, Satyam stated that the company has guaranteed payment of all sums payable by Nipuna to its two strategic investors — Olympus Capital, and Intel capital, upon redemption of the $20 million preference shares held by them. These preference shares are to be mandatorily redeemed or converted into equity shares not later than June 2007, if Nipuna achieves revenue targets and profits by March 31, 2006. Interestingly, although certain triggering events for early redemption have occurred during January to December 2004, the investors waived their right of early redemption. Further, if these targets are not achieved along with other events, the investors have an option to either redeem the preference shares or convert them. If these are not converted, these preference shares are redeemable on maturity in June 2007, at a redemption premium that could range between 7.5 per cent to 13.5 per cent per annum.
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