Raju family’s 5.13% stake in Satyam also in jeopardy

Satyam Computer Services Ltd chairman B. Ramalinga Raju and his family now own just 5.13% of the company after institutional investors who lent money against shares began selling some of that stock.
In a disclosure to the Bombay Stock Exchange (BSE), Satyam said that of the 5.13% stake remaining with the promoters, nearly 21.9 million shares, or equivalent to a 3.13% stake in the company, are already transferred to lenders’ account under pledge invocation. That appears to leave Raju’s family with only 12.6 million shares, or 1.87% stake in the company.

But “the risk of their holding being sold by the lenders now appears to be higher than thought earlier, since 3.14% has already been sold in the market, 3.13% is already transferred to lenders’ account under pledge invocation and the balance 1.8% is still under pledge with the lenders, to be invoked at any time,” said T. Hari, head of global communications at Satyam.
The disclosure comes days after Raju and family disclosed their entire 8.27% stake had been pledged against money they had borrowed. That disclosure promptly led to at least two independent directors of Satyam resigning.
Raju has been embroiled in a corporate governance and self-dealing scandal since he proposed—and Satyam’s board unanimously approved—a plan to use $1.6 billion (nearly Rs7,825 crore) of Satyam’s money to buy two infrastructure firms that were promoted by his sons.
Satyam abandoned the proposal within 12 hours after an immediate investor backlash saw its US-listed shares plunge 55%. The shares have never fully recovered from the plunge that began on 16 December.
The disclosure that Raju and family have such a minuscule share of the company’s equity is now likely to add significant pressure on the company to dump the promoter managers as the botched deals to buy Maytas Properties Ltd and Maytas Infra Ltd are widely seen as an attempt by Raju and his family to ignore the rights of shareholders, who include many institutions that now own more shares than Raju and related promoters.
A 10 January board meeting has been scheduled by the embattled Satyam, with just five of the nine board members remaining following two other resignations after the Maytas deals collapsed.
Satyam’s stock fell 2.63%, or Rs4.80 a share, to end at Rs177.55 on BSE on Friday. Despite gains this week, the shares are nowhere near the Rs226.50 they closed at just hours before the twin deals were unveiled.
It is still unclear who the lenders were and why Raju and family needed to borrow money, and what they did with the money they took against their Satyam shares. Raju has declined to address these and other questions in recent days while claiming management is doing all it can to restore investor faith in Satyam.