May not delist Patni if deal not done at $215m: iGATE

11854 Investors following Patni Computer. Share this News with them.

0

Like this story, share it with millions of investors on M3

May not delist Patni if deal not done at $215m: iGATE

In an interview with CNBC-TV18, Phaneesh Murthy the CEO of iGATE said they plan to arrange a debt facility of about USD 215 million to fund the share purchase.

Post your opinion here

 

0

Tweet

Share on Tumblr

Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See latest News about Patni Computer See previous management interviews See what other Experts & Brokerages are saying about Patni Computer Patni Computer BSE | NSE 18/05/12 Are Mutual Funds betting on Patni Computer?

Software firm iGATE Corporation is looking to buyout Patni Computer Systems and delist the later from the Indian bourses. iGATE intends to fund the acquisition of the shares through debt.

In an interview with CNBC-TV18, Phaneesh Murthy the CEO of iGATE said they plan to arrange a debt facility of about USD 215 million to fund the share purchase. "We will not be able to afford a delisting beyond that price."

 At USD 215 million, the price works out to Rs 400 a share for the minority stakeholders. The delisting offer is subject to approvals from Patni shareholders and regulators, and will be done through the reverse book-building process. The deal is expected to close by mid-2012.

Below is an edited transcript. Watch the accompanying video for more.

Q: What kind of money have you set aside for this delisting? Is it just USD 215 million that you take recourse to in terms of debt or also the USD 65 million of cash you are sitting on?

A: The total amount we are thinking is USD 215 and this is constrained by the limits that we have, the covenants that we have signed. We are hoping to be able to do this at USD 215 million. We believe that if we cannot do this at USD 215 million then we may not be able to afford to do this deal at all.

We think that there are some strategic benefits in the synergies but currently we have operationally integrated the two companies quite comfortably. So to that extent it may not give us any more operational flexibility but it does give us some strategic benefits by having the delisting done.

Q: While the floor price has been set much lower, the market has taken that total figure to assume that you are willing to pay something northwards of Rs 400 per share in order to go ahead and do that listing. Is that a price that iGATE is comfortable with?

A: I am assuming because typically the floor price is about Rs 350-360 and one assumes that normally there will be some small premium to be paid although in the last few weeks the price has gone up a little based on the potential perception that we will want to do this delisting.

Q: Your press release says that if you see the ultimate discovered price to outweigh the benefits versus the gains you may not go ahead and do it. At what point will it not make sense for you, is there a price you have in mind or something else?

A: It's the total amount of debt that we can raise. The number of USD 215 million that we have earmarked that we think is a fairly reasonable number from our perspective as to what we are willing to pay for the whole thing and basically what we can afford to pay. It is an affordability issue right now for us.

Q: USD 215 million roughly works out back of the envelope to roughly Rs 450 per share. Are you saying that even in terms of Patni's valuations it does not make sense to go much beyond that because the stock has already reached Rs 420 today?

A: Yes and actually it will probably be less than Rs 450 per share. If you look at the fully diluted basis, if you look at all the shares because there are a lot of employee options which are there and a lot of them are vested but are not yet exercised. If you add all of that it will probably be south of Rs 450. But at that point of time it will not make sense for us strategically to go ahead and do this transaction.