There is a new twist to the Satyam saga. In a late evening development, the board of Satyam announced that it will tweak the bidding process. The last leg of the bidding process will be tweaked to ensure more transparency.
Spice Group Chairman BK Modi said the company has received a bid process clarification from Satyam's board. "Our lawyers will examine it in detail." He added that the company has not yet decided to re-enter the race for Satyam. "The Spice board will meet to take a final call on participating in the auction."
As we come close to the financial bid date, we see some modifications been made by the Satyam board. They have informed Sebi and SEC. The modifications pertain to the last stage of the bidding process. It states that qualified bidders who have gone through the technically parameters satisfactorily will be ranked by price basically. So, that’s the new thing which has been brought in there. It is basically making it very explicit now that the ranking will be based on pricing or the final financial bid which will be made by the bidders. Earlier, it was not as explicit and that has been brought in now.
The open auction part has also been brought in now. Earlier, it was supposed to be through sealed envelopes or sealed bids. In an open auction, if one or more bids are 90% of the highest price, the highest bid price will be made the floor price. Those Bidders whose bids are 90% of the highest bid would be allowed to raise their bids. If no bidder raises their financial bids, the highest bid declared will be considered the successful bid. The mechanism for open auction will also be notified to bidders separately.
We understand from sources that even L&T had sought some clarification on this process. They were a little unhappy about the fact that the bidders’ names have not been disclosed in the open. From that point of view it is not very transparent. So, what the board has done is if the bidding process reaches the last stage, they are going to make it open.
Also, what we understood from some of the bidders was that the names of the bidders will be made public once the financial bids come in. That is what is required as per SEC norms as well as the Sebi norms. When the bidder puts in a sealed envelope with a financial bid, it is basically an offer for the company. This, as per the SEC norms, has to be brought into the public saying who is the bidder. Though I am not certain whether the bid price will be made public, but my guess is that the names of the bidders who are going to put the financial bids would be brought out in public domain. That will only happen once the sealed financial bids are submitted to the board.
On the second question about the modalities of the open auction, the entire modalities are not out. Though the broad contours are out as part of the amendment to bid process, which has been released to Sebi and SEC, the entire modalities will be announced or informed to the bidders separately. That is what the Satyam board has said in its letter.
No comments:
Post a Comment