Cairn extends deadline for wrapping up deal with Vedanta

May 19th, 2011 - 5:14 pm ICT by IANS  

Mumbai, May 19 (IANS) London-based oil and gas exploration major Cairn Energy Thursday said it had extended the closing date for the sale of 40 percent stake in its Indian subsidiary to Anil Agarwal-led Vedanta Resources.

Cairn has been informed that the Cabinet Committee on Economic Affairs which met on April 6 to discuss the Cairn Vedanta transaction has referred the matter to a group of ministers (GoM). “The GoM has not yet met,” said Cain Energy in a statement to the London Stock Exchange.

“Accordingly, the two companies have agreed to extend the closing date of their Sale and Purchase Agreement in order to secure the necessary consents and approvals from the GoI to complete the transaction,” it added, but did not disclose the new date by which it expected to wrap up the deal.

Vedanta is proposing to acquire majority stake in Cairn India for up to $9.6 billion but the deal has been held up due to protest from the state-owned ONGC, which has a 30 percent stake in Cairn India’s oil fields in Rajasthan — the biggest onshore finds in the country in two decades.

Although it owns less than a third of stake in the oil fields, ONGC has to pay royalty for the entire output of crude from the fields. The state-owned explorer has asked the government to correct this anomaly.

Both parties have been urging the government to take a call on the approval and had to extend an earlier deadline of April 16 too.

Vedanta, on the other hand, has already completed the mandatory 20 percent open offer for Cairn India, through its Indian subsidiary Sesa Goa. It managed to buy 8.1 percent of the shares through this offer.

It also bought a 10.4 percent stake from Malaysian energy major Petronas. With these two transactions, Vedanta now owns 18.5 percent stake in Cairn India.

The Cairn India scrip closed 0.49 percent up at Rs.341 at the Bombay Stock Exchange. It had touched an intra-day high of Rs.342.50.

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