Satyam settles US suits
Scam-hit Mahindra Satyam has finally got yet another major legal liability off its back by deciding to settle the class action suits filed by US investors for a consideration of $125 million. The settlement, inked on Wednesday night with the US investors, would be made out of the companys cash reserves of over Rs 3,000 crore and is subject to approval of the Southern district court of New York as well as the RBI. The settlement amount would include taxes, compliance costs, attorneys fees and expenses, the company clairified. The money will be transferred into an escrow account in a few days. Once the court gives its approval to the settlement, which may take around four months, the amount will be delivered to the lawyers of the plaintiffs and distributed among them, Mahindra Satyam chairman Vineet Nayyar said. The settlement, however, does not include the estimated $68 million liabilities which arise out of the Aberdeen Action that has also been filed in the same court (the Southern district court of New York) by a trustee of two trusts comprising twenty investors, Nayyar clarified. A group of US investors had dragged Satyam to court to claim damages for the losses incurred by them when the company’s scrip crashed on the New York stock exchange in the aftermath of the sensational disclosures made by disgraced Satyam founder B Ramalinga Raju on January 7, 2009. Apart from the $125 million in settlement, the US investors would also get a 25% cut-out of the net recovery the company makes in the future from PwC-related entities if it decides to go ahead and sue the firm which was Satyam’s former auditor. Nayyar also indicated that the company was contemplating legal action against Satyam founder Raju. “We are not yet decided when we will sue PwC and Raju and for how much. There is no timeline and the extent of damages has not been determined yet,” he said. The latest settlement, according to Nayyar, paves the way for the merger of Mahindra Satyam with parent Tech Mahindra. “It is our intention to merge the two companies. With the uncertainty having gone away we will pursue this (merger) more actively,” the Mahindra Satyam chief explained.