Cairn India will raise approximately $625 million (Rs2,534.6 crore) in a private-placement deal with Petronas and Orient Global Tamarind Fund Pte Ltd in exchange for around 113 million shares at Rs224.30 per share of the Indian arm of the UK-based Cairn Energy Plc.
The issue price represents a 0.46-per cent premium to the average closing price on the National Stock Exchange of the last two trading days prior to the announcement.
In the board meeting held this morning, Cairn's board approved a preferential issue of 63,300,000 equity shares of Rs10 each to Petronas and 49,700,000 shares to Orient Global Tamarind Fund Pte Ltd.
Following the private placement, Petronas will own approximately 12.7 per cent of the equity share capital of CIL as enlarged by the private placement and Orient Global Tamarind Fund Pte Ltd will own approximately 2.6 per cent.
According to Cairn India, these shares will be locked in for a period of one year from the date of allotment.
Cairn India plans to use the net proceeds of the private placement to fund capital expenditure and for general corporate purposes. The deal is subject to regulatory approvals after the shareholders accent to it at the meeting of the equity shareholders scheduled for 16 April 2008.
"The company is confident of producing first commercial oil from Rajasthan in 2009," said Rahul Dhir chief executive officer of Cairn India. "The private placement will help meet investment plans and provide greater financial and operational flexibility."