New Delhi:UK’s Cairn Energy Plc on Tuesday said it will seek shareholder nod for sale of majority stake in its Indian arm, Cairn India, to London-listed Vedanta Resources Plc for up to $8.48 billion on 7 October.
“The General Meeting (of the shareholders) will be held at Edinburgh on October 7, 2010, at 1400 hours (local time),” the company said in a notice for the extraordinary general meeting (EGM).
Cairn Energy is selling between 40 and 51% of its 62.38% stake in Cairn India to billionaire Anil Agarwal-run Vedanta Resources group for up to $8.48 billion.
Mimicking Australian mining firm BHP Billiton Ltd’s strategy of diversifying into oil, Cairn India will give Vedanta access to nation’s biggest onshore oilfield.
Cairn India, currently, produces 125,000 barrels of crude oil per day (6.25 million tonnes a year) from Mangala oilfield in Rajasthan and has stated that output can rise to 150,000 bpd (7.5 million tonnes).
The entire Rajasthan block, which is estimated to hold 6.5 billion barrels of in place oil reserves, can produce up to 240,000 bpd, equivalent to 12 million tonnes a year of peak output from state-owned Oil and Natural Gas Corp’s (ONGC) prime Mumbai High fields in the western offshore.
Cairn Energy Plc chief executive Bill Gammell had last week stated that the deal hinges upon completion of an open offer by the Vedanta Group to minority shareholders of Cairn India.
Vedanta Resources Group is yet to get market regulator Sebi’s approval for an open offer to acquire up to a 20% stake from minority shareholders at a price of Rs 355 a share, Rs 50 less than what it is paying Cairn Energy for a majority stake.
The open offer, as per the schedule announced by Vedanta last month, is to open on 11 October.
The nod by Cairn Energy shareholders would mean nothing unless Vedanta is able to complete the open offer in India, he had said on 16 September in the National Capital.
Vedanta is paying Cairn Energy Rs 405 per share for a 40 to 51% stake in Cairn India. This includes a Rs 50 non-compete fee to keep the Edinburgh-based firm out of India, Pakistan, Bangladesh and Sri Lanka for three years.
The minority shareholders have been offered a price sans the non-compete fee.