Proposed part sale of shareholding in Cairn India Limited Cairn India to Vedanta Resources plc

abarrelfull wrote on 28 Jun 2011 05:44
Tags: cairn deals india vedanta

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Cairn and Vedanta have agreed to certain adjustments to the Transaction sale and purchase agreement for the sale of part of Cairn Energy PLC’s shareholding in Cairn India, involving the removal of the non-compete arrangements and associated fee, which are expected to result in a 5.3 per cent reduction in post-tax proceeds. Cairn and Vedanta have also agreed that completion of the Transaction will take place in two tranches: an initial sale of a 10 per cent stake in Cairn India, and a subsequent sale of a 30 per cent stake which remains subject to receipt of the necessary consents and approvals from the Government of India.

The removal of the non-compete fee will result in a reduction in the effective sale price from $8.66 per Cairn India share to $7.85 per Cairn India share. This change in price applies to both the initial sale of 10 per cent and the subsequent sale of a 30 per cent stake in Cairn India. Gross proceeds for the sale of a 40 per cent interest in Cairn India will amount to $6,023 million with net proceeds expected to be approximately $5,408 million in cash.

The sale and purchase of the first tranche of sale shares, being 10 per cent of the fully diluted share capital of Cairn India, will be completed on or before 11 July 2011. The gross proceeds for the sale of the first tranche of sale shares will amount to $1,506 million with net proceeds expected to be approximately $1,365 million. The sale and purchase of the second tranche of sale shares will be 30 per cent of the fully diluted share capital of Cairn India and remains subject to receipt of the necessary consents and approvals from the Government of India. The gross proceeds for the sale of the second tranche of sale shares will amount to $4,517 million with net proceeds expected to be approximately $4,043 million.

Vedanta's acquisition of this 10 per cent stake in Cairn India means the Vedanta Group will hold an aggregate 28.5 per cent stake in Cairn India and Cairn Energy PLC will retain control of Cairn India as it will remain the majority shareholder with its 52.2 per cent shareholding.

Sir Bill Gammell, Chief Executive of Cairn Energy PLC said:

“Cairn is pleased to have secured this adjustment to the agreement with Vedanta. Cairn continues to believe the necessary approvals to complete the Vedanta transaction will be received and is working with the Government of India in a positive and constructive manner.”

Anil Agarwal, Executive Chairman of Vedanta said:

“Vedanta believes this initial 10% purchase is a further demonstration of its commitment to India. We look forward to the successful completion of the proposed transaction.”

• Proposed part sale of shareholding in Cairn India Limited Cairn India to Vedanta Resources plc

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