Jolt for Tech Mahindra as Upaid goes ahead with Satyam suit

Written by Rachana Khanzode | Mumbai | Updated: Jun 4 2009, 08:28am hrs
Tech Mahindra Ltd, the new owner of Satyam Computer Servcies Ltd, has suffered a setback in its efforts to reach an out-of-court settlement with Upaid Systems, the UK firm that sued Satyam in the US.

Upaid is preparing for a trial of the case that starts on September 8. The mobile solutions provider is seeking damages in excess of $1 billion from Satyam in a fraud and forgery case.

Tech Mahindra had reportedly offered Upaid about $10 million, or one per cent of what Upaid is seeking. Simon Joyce, CEO, Upaid, told FE over the phone from Singapore, There is no out-of-court-settlement happening at this stage, and Upaid will be going for the trial on Sept 8, 2009.

The trial was due on June 1 in the Texas court, but was postponed after Satyam got a 90-day extension. According to Joyce, Satyam had asked for an extension of 12 months to study the implications of damages and prepare for the trial, however, it was granted only a 90-day extension.

Various official sources had earlier indicated that talks between Tech Mahindra and Upaid had taken place and Tech Mahindra had offered Upaid about $10 million to settle the IP infringement case.

In his previous interactions with FE , Joyce had indicated that Upaid was open for an out-of-court settlement. On March 12, when Satyam was still in the process of getting a new owner, he had said, We are open to an out-of-court settlementwith the new investor. With the large number of liabilities around Satyam, we feel such a step will help the new investor.

An investment banking expert in the know mentioned that Upaid was ready to settle for $100 million and thats where things got stuck.

Upaid had filed the suit in the Texas court in 2007, alleging that Satyam provided forged documents to it in patents filing that eventually resulted in the company losing its patent infringement case against telecom giants Qualcomm and Verizon.

Meanwhile, stocks of Tech Mahindra and Satyam surged on the bourses on Wednesday, a day after media reports said that Sebi had confirmed the Tech Mahindra open offer for Satyam.

However, the company spokesperson denied receiving any confirmation from the regulator. The Sebi Website indicates that it issued observations on May 27. The issuance of Sebis observations is mandatory for open offers.

Tech Mahindra, through its subsidiary Venturbay Consultants, had announced an open offer on April 22 for buying 20% additional equity in Satyam at Rs 58 per sharethe same price at which it bought a 31 % stake in Satyam earlier.