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Caterpillar Pushes Satyam for $40m Debt
Indian IT outsourcing giant Satyam is in the midst of a legal dispute with Caterpillar Inc (CAT) regarding non-payment for the acquisition of the latter's market research and analytics arm.
Satyam struck the deal to buy the business from CAT last April, in order to launch a unit to provide research and analytics services globally.
However, in January, Hyderabad-based Satyam was plunged into turmoil following an admission by founder and former Chairman B. Ramalinga Raju that he had overstated profit and revenue by about $1bn. He is currently in prison awaiting trial.
Since the acquisition was announced, just $20m of the agreed $60m has been paid. Satyam made an initial payment to CAT of $10m in August, and issued a promissory note for $50m at the same time.
Following the disclosure of fraud, CAT served legal notice on Satyam to notify the company of the termination of its asset purchase agreements and demanded immediate payment of the agreed balance.
'In March 2009, the parties began negotiating to amicably resolve the outstanding issues and the settlement negotiations are at an advanced stage,' Satyam said in a statement.
In April, IT service provider Tech Mahindra won its bid to acquire Satyam. The new owner is currently facing two litigation cases against Satyam, and four disputes with companies the firm had acquired.
More than 2,000 employees have left the company since the scandal broke.
Web sites: www.satyam.com and www.cat.com .
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