Buying Satyam may be a risky proposition

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Buying Satyam may be a risky proposition

Buying Satyam maybe more fraught with risks than expected earlier. Not only will the new buyer inherit its liabilities but even a partial sale could be blocked by investors seeking to claim compensation.

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Excerpts from After the Bell on CNBC-TV18 Watch the full show » ALSO READ See latest News about Mahindra Satyam See previous management interviews See what other Experts & Brokerages are saying about Mahindra Satyam Mahindra Satyam BSE | NSE 25/05/12 Are Mutual Funds betting on Mahindra Satyam?

Buying Satyam maybe more fraught with risks than expected earlier. Not only will the new buyer inherit its liabilities but even a partial sale could be blocked by investors seeking to claim compensation.

The problems with Satyam seem to be unending. There are a number of risks associated with the sale of Satyam. Any firm that decides to buy the beleaguered firm will also inherit all legal liabilities of attached with the company. Satyam also has liabilities in the US and the ADR investors have not been determined yet. A move to sell the company partially may be blocked by the US investors. The sale of parts of Satyam may be fraught with risks and even an SPV created with the assets of Satyam may inherit liabilities.

Indian government can indemnify new buyer against all liabilities globally and there cannot be any precedent for the Indian government on this.