(The following press release was received from the government's website. The sender verified the statement.) Proposed sale of shareholding by Cairn Energy Plc in Cairn India Limited to Vedanta Resources Plc. approved The Cabinet Committee on Economic Affairs considered the recommendation of the GOM constituted to examine the transaction and approved the proposal to grant consent to the sale of majority shareholding by Cairn Energy Plc in Cairn India Limited (CIL) to Vedanta Resources Plc in respect of (i) Seven (7) PSCs under NELP; (ii) Three (3) PSCs under pre-NELP subject to the conditions that (i) CIL and its subsidiaries to obtain No Objection Certificates from its partner, (ii) Vedanta Resources Plc providing the performance and financial guarantees as required, and (iii) Vedanta Resources Plc to obtain such other necessary approvals as required from regulatory bodies such as SEBI, etc., and in respect of Pre-NELP block in Rajasthan, (iv) cost recovery of royalty by ONGC to be agreed to by CIL and its subsidiaries and Vedanta Resources Plc as per the provisions of the PSC, and (v) CIL and its subsidiary to withdraw the Cess arbitration case. Further, the grant of consent for all the NELP and pre-NELP blocks is also subject to the condition that necessary security clearance is accorded by Ministry of Home Affairs to Vedanta Resources Plc to acquire the shareholding. The proposed sale of shareholding will result in Vedanta Resources Plc taking the controlling stake in Cairn India Limited. Background to the case: Cairn Energy PLC through its subsidiaries has entered into Production Sharing Contracts (PSCs) with the Government of India for carrying out exploration and production of oil & natural gas under pre-NELP and NELP rounds for several blocks. The pre-NELP blocks are RJ-ON-90/1, CB-OS/2 and Ravva (PKGM-1); the NELP blocks are PR-OSN-2004/1, MB-DWN-2009/1, KG-OSN-2009/3, KG-ONN-2003/1, KG-DWN-98/2, GS-OSN-2003/1 and KK-DWN-2004/1. Cairn Energy PLC vide letter dated 16.8.2010 inter alia informed the Ministry of Petroleum & Natural Gas about the proposed disposal of their 51% shareholding in Cairn India Limited (CIL) to Vedanta Resources PLC, which would involve Cairn UK Holding Limited, a wholly owned subsidiary of Cairn, selling to THL Aluminium Limited, a wholly owned subsidiary undertaking of Vedanta, a maximum of 51% of the fully-diluted share capital of Cairn India at completion and Vedanta to make an open offer to Cairn India shareholders, at not less than INR 355, for upto 20% of the issued shares in Cairn India, in accordance with the requirements of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (the "Open Offer") (Cairn will not participate in the Open Offer). With the proposed sale of shares, the CIL will undergo a substantial change in the ownership as the shares now will be held by Vedanta Resources PLC. This will have an impact on the rights and obligations of the Parties under the Contract and thereby on Participating Interest (PI) and thus, the contractor is required to obtain the consent of the Government as provided under article 28.1 of the PSCs under the pre-NELP blocks and under article 28.2 of the NELP PSCs.
INDIA APPROVES VEDANTA’S CAIRN STAKE PURCHASE WITH CONDITIONS
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