Satyam Computer Services Ltd today announced the commencement of a competitive bidding process for selection of an investor to acquire 51 per cent equity interest in the company.

Interested bidders will have to submit a detailed expression of interest (EOI) together with the proof of financial strength of at least Rs1,500 crore (about $290 million) by 5:00 pm on 20 March 2009. 

Those bidders, who have validly registered their interest in participating in the bid process, will be sent a request for participation (RFP) shortly thereafter, the company said in a release.

Based on the revised takeover regulations as amended by the Securities and Exchange Board of India (SEBI) and subject to receipt of all approvals, the board of Saytam Computer Services has proposed an initial subscription of 31 per cent of the company's newly-issued share capital by the selected investor.

Upon deposit of the entire subscription amount, the selected investor should also ensure requisite funds necessary for the public offer in the escrow account as required under the SEBI takeover regulations.

The investor will be required to make a mandatory public offer to purchase a minimum of 20 per cent of the company's enhanced share capital. The public offer will be made at the same share price as the price paid by the investor for the initial subscription; and

If, upon closing of the public offer, the investor would have acquired less than 51 per cent of the enhanced share capital of the company through the initial subscription and the public offer, the investor would have the option to subscribe to additional newly issued equity shares, such that the shares acquired by the investor through the three steps results in the investor acquiring not more than 51 per cent of the enhanced share capital of the company.

''Ability to subscribe to additional equity shares in the third related step would be subject to the terms and conditions specified in the request-for-proposal (RFP). The subsequent subscription, if any, will be required to be completed within 15 days of the closing of the public offer and will not result in requiring a further public offer,'' the release noted.

All interested bidders should register their interest in participating in the bidding process by accessing http://www.satyam.com/bidprocess/march09/index.asp and registering their interest by 5:00 pm on Thursday 12 March  2009, subject to their meeting the registration requirements set forth on such website.  

The process for selecting a bidder will be overseen by a former Chief Justice of India or a former Supreme Court judge appointed by the company, the release added.

Eligible bidders will be short-listed and given access to certain business, financial and legal diligence materials relating to the company provided they have executed a non-disclosure and non-solicitation agreement, a stand-still agreement and a 'no-claims' undertaking. After completion of the due diligence process and execution of the pre-financial bid documents, all short-listed bidders will be asked to submit their financial bids and an executed copy of the share subscription agreement.

Based on an evaluation of the bids, the company will select the successful bidder, after which the successful bidder will have four days to deposit with the company the entire subscription amount, and the requisite funds for the public offer in an escrow account.

''Under the amended SEBI guidelines, there is no requirement to have a minimum floor price in connection with the initial subscription,' Satyam said in its release.

Upon selection of the successful bidder, the company will be required to approach the Company Law Board and SEBI for approval and, upon receipt thereof, the successful bidder would be allowed to consummate the subscription.

''These securities may not be offered or sold in the United States absent registration or an exemption from registration under the US Securities Act of 1933, as amended, '' the company release said, adding, ''The company does not intend to register any securities in the United States or to conduct a public offering of securities in the United States,'' the release added.