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Satyam plans second ADS issue

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CIOL Bureau
New Update

BANGALORE: Satyam Infoway Ltd. has proposed to go for another round of ADS offering to raise $115 million to complete its acquisition of IndiaWorld Communications Pvt. Ltd.



Satyam Infoway has announced that it has filed an application with the Finance Ministry for a follow-on offering of American depository shares, according to a company statement. The application seeks approval for an offering of up to $115 millions, including a greenshoe option of $15 millions, in ADSs by Satyam Infoway in an underwritten public offering to be conducted in the US. The company also announced a 4 for 1 split of its ADSs (called Sify), which are currently listed on the Nasdaq. It had hit the American market in October last to raise $75 million.



The purpose of the offering is to provide funds to exercise the option held by Satyam Infoway to purchase the 75.5 per cent of IndiaWorld Communications Private Ltd. and to provide funds for general corporate purposes. It acquired 24.5 per cent stake in IndiaWorld immediately by paying cash. It also was given the option to buy the balance stake before September, 2000. The payment required to exercise the option is approximately $75 million.



The timing of the ADS offering would be decided once the government approvals in India and the US are obtained. It would also be based on prevailing market conditions. The price of the second offering is likely to be close to the market price at the time of the issue. The 4-for-1 split of Satyam's ADS is designed to ensure more liquidity for the stock and increase the participants in the market. The company's ADSs, which were offered at $18 initially, are now quoting at a high of $145. With the split, the price of the ADS would come down to a level of $37. This is expected to attract smaller investors and increase liquidity at the counter. All those who hold Satyam's ADSs as on January 5, 2000, will be entitled to three additional ADSs for each ADS held. The company's equity shares, which are not publicly traded, will not be split.

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