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Sify takes IndiaWorld with revised settlement

Our Bureau

CHENNAI, July 3

SATYAM Infoway Ltd (Sify) has changed the settlement pattern of the IndiaWorld Communications Pvt. Ltd. deal. Against the all-cash deal announced earlier, it will be a cash plus stock settlement now. Under the changed structure, Mr. Rajesh Jain, promoter of IndiaWorld, will get equity shares of Sify which are not listed on any exchange.

According to a Satyam Infoway press release, it has acquired the remaining 75.5 per cent stake in IndiaWorld in a part cash and part stock deal.

In November 1999, Sify acquired a 24.5 per cent stake in IndiaWorld for Rs. 122.20 crores and paid a deposit of Rs. 51.30 crores to acquire an option to buy the remaining 75.5 per cent on paying a further Rs. 325.40 crores before June 30, 2000.

Sify, the release said, completed the acquisition by paying Rs. 215.40 crores in cash and issuing 268,500 fresh equity shares for Rs. 110 crores.

Sify's equity shares issued for this purpose were valued at Rs. 4,097 per share ($ 91.75 per share; equivalent to the quote for four ADRs on the Nasdaq on June 23). The equity shares issued to the former IndiaWorld stockholders were not listed in India a nd under present law were not convertible into ADRs, the release said.

``The restructuring of the deal (whereby a third of the balance payable is issued in stock) is primarily a reflection of Sify's association with Mr. Ramesh Jain, the promoter of IndiaWorld,'' the release said. Mr. Jain had been closely involved in Sify's business since November and was part of the team that was shaping Sify's business and future.

Senior company officials said that the reason for change in the composition of the deal was ``mutual''. He said that earlier, Mr. Jain was not considered as a ``strategic investor'', by the market but, with around nine months completed after the deal, `` it is of great value to have Mr. Jain with us''.

The official said that Mr. Jain was a member of the advisory board of SIFY and his contribution to the business was ``useful''.

The release quoted Mr. Jain as saying: ``Our acceptance of shares in Sify instead of cash for part of the deal reflects the confidence in and commitment for Sify's business and future''.

IndiaWorld has a capital of Rs. 20 lakhs, where a share of Rs. 10 has been valued at Rs. 25,000.