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| Don't worry on Vedanta: Cairn letter to govt |
| BS Reporters / New Delhi Aug 28, 2010, 00:40 IST |
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Says willing, post-deal, to comply with any new conditions, if reasonable.
Allaying the Union government’s concern on its deal with Vedanta Resources, Cairn Energy has given a written assurance to the petroleum ministry that its subsidiary, Cairn India Ltd (CIL), will comply with all obligations arising out of its production sharing contracts (PSCs).
In a letter addressed to petroleum secretary S Sundareshan, Cairn Energy chief executive Bill Gammell has ‘introduced’ Vedanta Resources (giving details of Vedanta’s business, audited accounts of Vedanta and Sesa Goa, etc) and tried to allay concerns of the ministry on the stake sale.
Gammell’s August 26 letter is in response to some clarifications sought by the petroleum ministry on August 19. In a deal announced on August 16, Vedanta had agreed to buy 51-60 per cent stake in Cairn’s subsidiary, Cairn India, for $8.5-9.6 billion.
“The contract with Vedanta is at shareholder level of Cairn India, with no change to the participating interest in any of the PSCs. We can also confirm that there are no planned changes in the Cairn India organization, standards, policies and systems and that the transaction will have no effect upon Cairn India’s knowledge and experience as a PSC contractor,” Gammell said in his letter.
Gammell has assured that the Cairn India management team and organisation will continue to “focus on maximising the potential of its asset portfolio in India”.
Compliance in reason
> On the ministry’s stand that Cairn Energy will have to seek approvals for stake sale, Gammell has said both Cairn Energy and Vedanta Resources are willing to comply with any reasonable conditions of the Indian government and petroleum ministry as may be necessary in the circumstances to ensure performance by CIL of its obligations under the PSC.
“It is the intention of all parties that appropriate consents as required under the laws will be obtained from the petroleum ministry,” he said.
Adding: “ The proposed sale will not adversely affect the performance or obligations under the various PSCs nor be contrary to the interests of India. We sincerely believe the proposed sale and Vedanta’s rationale and strategy for Cairn India will bring additional benefits to both Cairn India and India as a whole.”
According to Gammell, Cairn India will benefit from Vedanta’s successful experience in executing and operating complex large scale industrial projects, access to diverse sources of capital and speedy decision making.
CIL is the operator of the Barmer block in Rajasthan, with a 70 per cent participating interest; its joint venture partner, the government-owned ONGC, has the other 30 per cent. Average crude oil production from the block is 120,000 barrels per day. Cairn India is also the operator of the Ravva oil and gas field and of Cambay Basin (CB/OS-2), which produce 37,043 and 13,527 barrels of oil equivalent per day.
SC refuses to stay Sesa Goa open offer for Cairn India
The Supreme Court today declined to restrain Sesa Goa, a subsidiary of Vedanta Resources, from launching an open offer to buy stake in Cairn India. A shareholder of Sesa Goa, who had moved the petition, withdrew it after a Bench, headed by Justice G S Singhvi, heard his counsel for some time.
The shareholder, Harinarayan Bajaj, had objected to the participation of Sesa Goa in Cairn India’s takeover by parent Vedanta group, as, according to him, the company was facing inquiry and another case was pending before the Supreme Court. The bench said it would take up the other case on October 28.
According to the Cairn-Vedanta deal, London-listed Vedanta Resources will acquire 31 to 40 per cent interest in Cairn India, while the remaining 20 per cent would be bought by group firm Sesa Goa. Vedanta’s open offer is scheduled to start on October 11 as part of its $9.6-billion takeover.
The main petition pertains to the validity of Vedanta Group’s acquisition of 51 per cent in Sesa Goa from Japan’s Mitsui & Co. Sesa Goa was acquired in 2007 by Vedanta group, headed by Anil Agarwal.
Bajaj had alleged that the company itself was acquired by violating the provisions of the Substantial Acquisition of Shares and Takeover Regulations.
It was also alleged that the Serious Fraud Investigation Office was examining the affairs of Sesa Goa. Bajaj had prayed as all these things were yet to be sorted out, the transaction should not be allowed.
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