Company says it can't predict financial impact of investors' class-action claims.
On-the-block outsourcer Satyam is warning potential buyers that it has no way of estimating the impact of numerous class-action lawsuits filed against the company in the wake of an accounting scandal that's been dubbed "India's Enron."
"Neither the company nor its counsel will be in a position to provide an estimate of the potential claim values or settlement values in such class action suits," Satyam said in a document filed Tuesday with the U.S. Securities and Exchange Commission. "The bidder may undertake its own independent assessment based on publicly available information."
Satyam said it hopes to complete the sale process by April 30. Interested bidders include iGate, Larsen & Toubro, and Spice Group.
Satyam shares plummeted in early January, after chairman Ramalinga Raju admitted falsifying the company's cash position by as much as $1 billion while overstating quarterly earnings and revenue by up to 28%. Satyam may also have faked employee numbers and other data. Raju tendered his resignation and has been arrested and jailed.
Numerous investors have since sued the company for fraud and misrepresentation.
Raju is now in the custody of CBI, India's equivalent of the U.S. Federal Bureau of Investigation. Other Satyam officers, and two employees of PricewaterhouseCoopers India, have also been detained in connection with the case.
Earlier this week, India's Economic Times reported that Satyam generated thousands of fake customer invoices as part of the scam. The newspaper, citing CBI sources, said the agency has retrieved more than 7,000 fake invoices and numerous other spurious documents over the past several weeks.
The upshot: The total size of Satyam's deception is now approaching $2 billion, according to the paper.
Increasingly nervous Satyam customers are looking for alternatives in case the scandal-scarred outsourcer is unable to restore internal stability or find a buyer with pockets deep enough to see it through the current crisis.
This week, the United Nations said it planned to terminate its contracts with Satyam and bar the outsourcer from bidding on future work.
Another Satyam customer to eye alternatives is Selective Insurance, the 47th largest property and casualty insurance company in the United States. Selective has outsourced about a quarter of its IT staffing requirements to Satyam, but it may be looking for other arrangements in light of Satyam's woes, according to a document the company recently filed with the SEC.
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