Edinburgh-based Cairn Energy Plc, which gets nearly 95 per cent of revenues from its Indian operations, sold controlling stake to London Stock Exchange-listed Vedanta Resources Plc. Cairn is expected to raise $8.48 billion from this stake sale. In a conference call, Bill Gammell, CEO, Cairn Energy Plc, speaks on the deal. Edited excerpts:
Does this mean Cairn’s exit from India?
Cairn Energy will sell a 40 per cent interest in Cairn India to Vedanta, which will make an open offer for 20 per cent to Cairn India shareholders. If it is all taken up, Plc will be left with a situation where it has to sell 40 per cent. But if it is not, then Cairn will sell up to 51 per cent, in other words another 11 per cent to ensure Vedanta gets effective control. So, we are not withdrawing from India.
Is there a time line to the open offer?
The process will be announced later this week and should take 90-120 days. Sebi has a role to play and right upfront, in approving the open offer. As soon as that is through, the 90 days should start.
Vedanta is paying a non-compete fee of Rs 50 per share to Cairn Energy. Why?
Cairn Energy has a long track record in exploration. It makes sense, then, to let Cairn India the freedom to operate in certain areas without any competition from Cairn Energy Plc, to restrict our activities. Cairn Energy will not seek any oil and gas and exploration licences or production licences in Pakistan, India, Bhutan and Sri Lanka. As a shareholder in Cairn India, we continue to be very much involved and we hope to continue this.
That means you will not bid for blocks in India.
Cairn India will go forward under the Vedanta banner and (in those areas) there will be no ability for (Cairn Energy) Plc to compete. We may join hands and partner in other exploration opportunities around the world.
So, Cairn India will give up operatorship in its blocks?
I think we need to understand that Cairn India is an independent company in its own right. It is Cairn India, which has done developments in the past few years and taken it forward. So, Cairn India is a highly competitive and efficient operator, which will continue under a slightly different ownership structure.
