Just a day after his inauguration, President Obama and his dream team wasted no time in jumping into the issues head first, trying to figure out the best way to stabilize the financial industry. It appears that the government will pump more funds into fledgling banks, buy more rotten assets and potentially buy convertible securities from financial institutions.
Also gearing up to help banks? Our dear, old friend Satyam. The company's newly appointed replacement board is now working to secure emergency funding and is planning to appoint a bank to help it pick up the pieces. On the shortlist? JPMorgan and Goldman Sachs. The firm's bank of choice is to be announced tomorrow.
To gauge the dire situation of this company, consider the fact that the board still doesn't know the extent of the fraud (it just learned yesterday that Chairman Ramalinga Raju didn't pad the numbers on the firm's balance sheet, as he had claimed when this story initially broke, but was actually skimming - more like slicing huge slabs - millions, perhaps billions, off the top ? not that anything should come as a surprise any more in this case ?). Moreover, Satyam isn't even sure how much money it actually has, making it virtually impossible for it to know if it can pay off its bills. As such, the firm is now ready to sign off some of its projected receivables as collateral to secure loans and funding. So far, no word on the potential of a government bailout - too bad for Satyam, if it was headquartered in the US, it'd likely have had a sugar daddy by this point.
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