Fraud-scarred Satyam Computer Services on Tuesday named a management adviser and investment bankers to help revive its fortunes and said it would pay January salaries on time.
Shares in the company soared 21.36 percent to 47.15 rupees after engineer Larsen & Toubro said it might lift its stake in the outsourcing firm to 15 percent from 12 percent.
Satyam has been struggling for survival since Jan. 7 when founder Ramalinga Raju revealed profits had been overstated for years and $1 billion in cash on the books did not exist. He resigned as chairman and was arrested in India's largest corporate fraud.
The board of the outsourcer said it had appointed Goldman Sachs and Avendus, an Indian investment bank, to identify strategic investors and obtain expressions of interest.
"The board has received several proposals from corporate entities as well as from select PE (private equity) firms," T.N. Manoharan, who was appointed to the board by the government amd who chaired its meeting on Tuesday, said in a statement.
Some have shown an interest in buying Satyam as a whole while others have expressed interest in buying parts. But Manoharan said the latter was not an option.
While U.S.-based outsourcer iGate has said it would be interested in buying Satyam with PE help, Larsen & Toubro, which trebled its Satyam stake to 12 percent on Friday, said it would not be averse to raising it further.
"We don't rule out moving from 12 to 15 percent," L&T Chairman A.M. Naik told an analysts call, adding he would first wait for more clarity from the market regulator.
Under Indian law, moving to a 15 percent stake would trigger an open offer for a further 20 percent. The offer price would be based on the average price over the last six months or some 335 rupees, according to Thomson Reuters data.
Naik said L&T, India's biggest engineering and construction firm, raised its stake to protect its interest and expand its mid-sized outsourcing unit.
Manoharan said there had been wide bidding interest and a transparent process would be devised.
"It (L&T's stake buy) should not be taken as an indication of support by the government-nominated board for change of control of Satyam at this stage," Manoharan said.
CHEER FOR EMPLOYEES
The six-member government-appointed board met to consider funding options for the firm until the end of March, discuss L&T's expanded stake and draw up a short list for the posts of chief executive and chief financial officer.
Boston Consulting Group was appointed as management advisers to support the directors in the revival process, the statement said.
Satyam said January salaries would be paid as scheduled from internal accruals and receivables. The proposed management structure would be released this week, the board said.
Earlier, board members said in a webcast to employees they were arranging funds from banks and financial institutions, including state-run Life Insurance Corp.
"We will work out some working capital loans from bankers and some rupee term loan from financial institutions, particularly my own organisation," S. Balakrishnan, a senior official at India's largest insurer LIC and a member of the new board said.
Satyam is facing a huge liquidity crunch and until accounts are restated banks were unlikely to lend money, new board member and senior banker Deepak Parekh said in another webcast.
The new board has appointed KPMG and Deloitte to restate the accounts and former auditors S. Gopalakrishnan and Srinivas Talluri, who were arrested on Saturday, were suspended by Price Waterhouse, the audit arm of PricewaterhouseCoopers.
On Tuesday, a Hyderabad court heard the bail petitions of Raju and former chief financial officer Vadlamani Srinivas and reserved its judgment for Wednesday. The two are in judicial custody.
(Additional reporting by Prashant Mehra in MUMBAI)