(Corrects extent of share decline in first two paragraphs of story originally published March 18.)
March 18 (Bloomberg) -- Cairn Energy Plc, a Scottish oil explorer, slumped in London trading after saying it was suspending a share buyback program pending the resolution of a tax dispute in India.
The shares sank 14 percent to 168.2 pence, valuing the company at 973 million pounds ($1.6 billion). Volumes were four times the three-month average for a full day’s trading.
To date, 25,180,201 shares have been repurchased for $94.7 million as part of the buyback program, the Edinburgh-based company said today in a statement. That’s less than a third of the $300 million it had earmarked.
The Indian Income Tax Department, which will examine company finances for the year ended March 2007, ordered it not to sell its stake in Cairn India Ltd., the company said in January.
Cairn “was compliant with tax legislation in place at the time in each relevant jurisdiction, including India,” it said today. Cairn will be unable to sell its 10 percent holding in the Indian company, valued at about $1 billion, during the inquiry, it said.
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