Cairn India sells 51 percent stake
Cairn has entered into a conditional agreement with Vedanta, for the
sale of a maximum 51 percent of the fully-diluted share capital of Cairn
India, the company said. Cairn India has interests in 11 oil blocks in
India and Sri Lanka. The size of the interest in Cairn India sold by
Cairn may be reduced down to 40 percent of the fully-diluted share
capital of Cairn India on completion.
Oil exploration in the Indian Ocean. |
Cairn has given certain non-compete undertakings covering the
territories of Bhutan, Sri Lanka, Pakistan and India pursuant to which
Cairn has agreed that, for a period of three years, it will not engage
in the business of oil or gas extraction, its transport or processing
and any other business which competes with the business of Cairn India
and its subsidiaries as at the completion date in any of those
territories.
Cairn is expected to receive a cash consideration of between US
$8,480m (51 percent sold) and US $6,651m (40 percent sold), depending on
both the number of shares comprised within the fully-diluted share
capital of Cairn India at completion and the size of the interest in
Cairn India sold to Vedanta pursuant to the proposed transaction.
The Cairn Board believes that the proposed transaction delivers
positive benefits in line with Cairn’s strategic goals.
Cairn’s long-stated objective has been to add value for its
shareholders through exploration and to realise such value at the
appropriate time.
The IPO of Cairn India in 2007 provided a return of cash to
shareholders and created sufficient financial flexibility to allow the
fast-track development of Cairn’s world-class discoveries in Rajasthan.
The completion of the first phase of the Rajasthan development
represents a significant milestone for the Cairn Group, with the project
now producing 125,000 barrels per day.
The project is now materially derisked and as a result, significant
value has been created for Cairn shareholders.
The Cairn Board therefore believes that now is an appropriate time to
realise further value from its shareholding in Cairn India, whilst at
the same time maintaining exposure to the ongoing business through a
significant retained shareholding. |