Cairn India shareholders' accept government terms for stake sale
14 September 2011
Cairn India moved a step closer to sale of its Indian assets to Vedanta Resources after shareholders of the company today accepted the government's conditional approval for the deal.
The government had given conditional approval for the Cairn-Vedanta deal provided Cairn or the successor company agreed to royalty being added to the project cost and recovered from oil sales, as well as agreeing to pay its share of oil cess.
Cairn Energy had to lower the price it was demanding from Vedanta to make up for the reduced profitability due to acceptance of the preconditions.
It had also to remove a non-compete clause from the deal and the non-compete fee of Rs50 per share thereto.
Vedanta would now pay a reduced Rs355 a share for a 40 per cent stake in Cairn India for $6.02 billion, instead of the $6.84 billion announced earlier.
Cairn Energy, which holds 52.2 per cent in Cairn India and Vedanta and its Group company which hold 18.5 per cent of its equity had already accepted the government conditions for the sale and the postal ballot was a mere formality
Cairn India will now have to get a No Objection certificate from ONGC to formalise the deal.