Pending government approval, Cairn Energy has for the second time extended the deadline for closing the stake sale in its Indian subsidiary to Vedanta.
The Edinburgh-based company, however, did not specify a new date. April 15 was the earlier deadline and it was extended to May 20. But a day before the deadline expires, the two firms agreed to extend it by an unknown period.
The Cabinet Committee on Economic Affairs (CCEA), which met in early April to discuss the Cairn-Vedanta transaction had referred the matter to a Group of Ministers (GoM). “The GoM has not yet met. Accordingly, the two companies (Cairn and Vedanta) have agreed to extend the closing date of their sale and purchase agreement in order to secure the necessary consents and approvals,” the company said in a statement.
The GoM headed by Finance Minister Pranab Mukherjee is scheduled to meet on May 27. Once the GoM vets the deal, it will again go back to the CCEA for the final approval.
Cairn said Vedanta subsidiary Sesa Goa had bought 155 million Cairn India shares, representing 8.1 per cent of the share capital, in an open offer. Furthermore, Sesa had bought a 10.4 per cent stake from Petronas International Corp of Malaysia, raising its total holding in Cairn India to 18.5 per cent. “Accordingly, on completion of the transaction, Cairn will sell a stake in Cairn India to Vedanta equivalent to 40 per cent of the share capital, following which Cairn will hold a residual interest of 21.7 per cent of the share capital,” the company added.
In August 2010, Vedanta had announced its plan to buy up to 60 per cent stake in Cairn India for $9.6 billion. The deal, government insists, requires approval, as it involves scarce natural resources.
