Vedanta meets all conditions for stake buy out: Cairn

December 7th, 2011 - 9:35 pm ICT by IANS  

Mumbai, Dec 7 (IANS) Oil explorer Cairn Energy Wednesday said it will go ahead with the sale of 40 percent of its stake in the India subsidiary to Anil Agarwal-promoted Vedanta Group after completion of all regulatory conditions.

“Vedanta has confirmed that it has now satisfied the conditions under the sales and purchase agreement for the acquisition of a controlling shareholding in Cairn India,” Cairn India said in a regulatory filing to the Bombay Stock Exchange (BSE).

The company said it intended to return substantial proportion of the proceeds from the stake sale to shareholders.

“A further announcement in this respect will be made in due course,” it said.

After the deal, the company will retain an approximate 22 percent share in Cairn India.

The latest development came after the home ministry Tuesday gave its approval to the security no-objection certificate (NOC) to the deal.

The NOC was one of the conditions that the government had set for the Vedanta Group for buying the 40 percent stake in Cairn India from its parent company Cairn Energy Plc.

Both the companies had earlier agreed to other conditions of Cairn India paying cess and royalty on crude oil produced from its Rajasthan oilfields.

The transaction was delayed since August last year due to a disagreement between Cairn India and its partner, the state-owned Oil and Natural Gas Corp (ONGC), over royalty payments.

On Sep 28, ONGC gave its approval to Vedanta Group buying the India assets of Britain-based Cairn Energy, a deal worth about $9 billion.

ONGC’s approval comes almost two months after the government gave its nod to the transaction. Cairn has already sold 10 percent stake in the Indian subsidiary.

Cairn Energy became a major player in India’s energy space after its huge oil find in Barmer, Rajasthan, in 2007.

The average crude oil production from Mangala oilfield in the Barmer block is currently over 44,300 barrels per day (bpd) and is in the process of being ramped up to the plateau rate of 125,000 barrels.

The block is estimated to hold reserves of 6.5 billion barrels of energy equivalent.

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