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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (5284)	7/26/1999 8:47:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 12475

Satyam to expand equity base via private placement, ADR C Chitti Pantulu Hyderabad, July 26: The board of directors of Satyam Computer Services on Monday decided to expand the company's equity base through two stages, beginning with a private placement before end-August and culminating in an ADR issue towards the beginning of the next financial year. In a parallel development, Satyam said it was completing formalities of a US listing for its 100 per cent subsidiary Satyam Infoway pursuant to FIPB clearance for an ADR issue by the ISP. Significantly, this follows the decision by the world's largest e-commerce company, Sterling Commerce of the US, to pick up 2.7 per cent equity, amounting to $5 million, in Satyam Infoway recently. The first stage of raising equity for Satyam Computers covers a proposal to raise funds through a private placement, the proceeds of which will be used to retire all debt on the company's balance sheet, the board decided after a meeting here on Monday. "The proposed equity capital raising exercise will make the company debt free, improve net margins,provide resources to fund future growth plans and enable the offer of US dollar stock options to its overseas employees," company chairman Ramalinga Raju said in a statement. The retirement of the company's existing debt will result in an interest saving amounting to over 6 per cent (about Rs 7 crore) of its revenues, raising the net profit margin to about 26 per cent on an annualised basis, he said. Jardine Fleming India Securities has been engaged as the financial advisor and placement agent for stage one of the capital-raising exercise. The company expects to complete its initial equity placement before the end of August. The market has been rife with rumours since the past week of such a placement for an equity expansion by 30 lakh shares. This resulted in the scrip rallying between Rs 200 and Rs 300 per share since the last settlement. On Monday, the counter hit a high of Rs 1,610, before closing at Rs 1,553. Considering Sterling Commerce has decided to pick up 2.7 per cent in Satyam's 100 percent subsidiary, market operators felt that the company could pick up equity in the parent firm too. Monday's move is pursuant to shareholders' permission accorded at the last AGM for expanding equity to the extent of an equivalent of $150 million or 15 per cent of the paid-up capital after a proposed bonus issue, whichever is higher. expressindia.com