We are Big Time Crooks, Confesses Satyam

If Shakespeare were writing Hamlet today, the bard would probably write Something is rotten in the state of Satyam. 

A few hours ago (17:40 EST), Indian IT services provider Satyam Computer Services announced that promoters’ stake in the company may have been reduced.

Some hours before that, Satyam put out a statement that it had postponed its board meeting scheduled for tomorrow (Monday) to January 10.

Dilution
Attributing the dilution to routine actions by the promoters’ lenders, Satyam said the promoters had informed the company that all their shares in the company were pledged with institutional lenders, and that some lenders may exercise or may have exercised their option to liquidate shares at their discretion to cover margin calls.

If the dilution has happened, it’d reduce the already low 8.74% stake held by the promoters in the company.

Surely, not a pleasing prospect to investors who usually like to see promoters hold a high stake in the company. You know something like eating your own dog food.

Murky Picture
The picture at Satyam is getting murky and dismal by the day. 

Earlier today, Satyam said it was postponing the board meeting scheduled for Monday to January 10 to let the board consider additional options.

Here’s Satyam Computer Chairman B. Ramalinga Raju’s blah blah blah:

Satyam’s Board of Directors recognizes the serious nature of certain questions raised by the events of the last two weeks. In order to ensure that these questions are properly addressed, and that the interests of stakeholders are fully and carefully considered, Satyam has decided to broaden the scope of its deliberations beyond a possible buy-back of its stock.

The additional possible actions Satyam’s board is supposed to consider on January 10 include:

* Measures to strengthen Satyam’s governance structure, including increasing the size and altering the composition of the board.

* Conducting a review of the company’s strategic options to enhance shareholder value. Satyam has engaged DSP Merrill Lynch to assist in this review. In plain English, this means possibly selling the company.

* Addressing issues arising from a possible dilution of the promoter’s stake in the company.

Satyam’s board is expected to make recommendations on these subjects at the January 10 meeting.

Unless you’ve just come in from some other planet, you know that investors are extremely unhappy with Satyam lately and have pushed its shares shaply lower.

After getting his ass whipped by irate investors over the proposed $1.6 billion acquisition of two building companies Maytas Properties and Maytas Infra with close links to the Raju family, Satyam Computer Services Chairman B.Ramalinga Raju recently decided against going ahead with the deals.

The Raju family has significant stakes in the Maytas companies (Maytas is Satyam spelled backward) raising corporate governance concerns that triggered downgrades by Citigroup and JP Morgan Chase.

Meanwhile the Economic Times is reporting that IBM, Accenture and Cap Gemini could be suitors for Satyam Computer.

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