NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, OR INTO, THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
FOR IMMEDIATE RELEASE 7 April 2011
CAIRN ENERGY PLC ("Cairn")
Proposed part sale of shareholding in Cairn India Limited ("Cairn India")
to Vedanta Resources plc ("Vedanta" and the "Transaction")
Approval of the Securities and Exchange Board of India ("SEBI") for Vedanta's Open Offer
On 6 April Vedanta announced receipt of SEBI clearance to commence the Open Offer for up to 20 per cent. of the shares of Cairn India. The Open Offer will be made by Vedanta's subsidiary, Sesa Goa Ltd, and will open for acceptances on Monday 11 April 2011.
To meet Indian takeover regulations, the Open Offer must be made to the minority shareholders of Cairn India and completion of the Open Offer is a condition precedent to the Transaction completing. Cairn and Vedanta have extended the long stop date in the sale agreement, by which all conditions must be completed or waived (where permitted), to 20 May 2011 in order to accommodate the completion of the Open Offer.
SEBI has also notified Vedanta that the put and call options exercisable by Cairn and Vedanta respectively and the pre-emption right exercisable by Vedanta in connection with the Transaction (referred to in more detail in the notes below) must be removed from the sale agreement as they do not comply with certain Indian securities regulations.
As a result of this stipulation by SEBI and to allow the Open Offer to proceed, Cairn and Vedanta have agreed that the put and call options shall not be enforceable or exerciseable. Vedanta has also agreed that its pre-emption right shall not be enforceable or exerciseable.
The enforceability of the sale agreement is otherwise unaffected and Cairn looks forward to the successful completion of the Transaction after obtaining all the necessary Government of India approvals and consents.
Immediately following completion of the Transaction, Cairn is expected to have a residual interest of between approximately 10.6 per cent and 21.6 per cent of the fully-diluted share capital of Cairn India.
Cairn Energy PLC
Sir Bill Gammell, Chief Executive
Simon Thomson, Commercial and Legal Director
Jann Brown, Finance Director
David Nisbet, Corporate Affairs
Tel: 0131 475 3000
Brunswick Group LLP
Tel: 0207 404 5959
NOTES TO EDITORS:
Cairn Energy PLC
Ø Cairn Energy PLC ("Cairn") is an Edinburgh-based oil and gas exploration and production company listed on the London Stock Exchange.
Ø On 16 August 2010 Cairn announced the entry into a conditional agreement with Vedanta to sell a maximum of 51 per cent of Cairn India to Vedanta. The number of Cairn India shares to be sold to Vedanta by Cairn pursuant the Transaction may be scaled back depending on the results of the Open Offer, subject to a minimum of 40 per cent of the fully-diluted share capital of Cairn India at completion being acquired pursuant to the Transaction.
Ø As set out in the Transaction announcement, Cairn and Vedanta entered into two reciprocal put and call options in respect of the difference in the number of Cairn India shares sold to Vedanta pursuant to the Transaction and 51 per cent of Cairn India's fully diluted share capital at completion each option being capable of being exercised in respect of a maximum of 5 per cent of the issued share capital of Cairn India as at the date of the exercise of the option. It was agreed thatthe first of these put and call options would be exercisable after 31 July 2012 for a period of 6 months and the other after 31 July 2013 again for a period of 6 months, in both cases at an effective price per Cairn India share of US$8.66. If there is no take up under the Open Offer the put and call options would not have covered any Cairn India shares. As announced today the put and call options have been removed from the sale agreement.
Ø Cairn also agreed to give Vedanta a matching pre-emption right over any subsequent disposal by Cairn of any shares where such transaction would result in the intended recipient obtaining more than 20 per cent of the issued share capital of Cairn India. As announced today the pre-emption right has been removed from the sale agreement.
Ø Following the IPO of Cairn India in January 2007, there are two separate arms to the Cairn business:
o Cairn India limited ("Cairn India") is listed on the Bombay Stock Exchange and the National Stock Exchange of India and has interests in a total of 11 acreage blocks in India and Sri Lanka. Cairn currently retains a 62.25% interest in Cairn India.
o Capricorn Oil Limited ("Capricorn"), a 100% subsidiary of Cairn, is focused on exploration. Capricorn has assets in Nepal, Greenland, Albania and Spain.
Ø "Cairn" where referred to in this release means Cairn Energy PLC and/or its subsidiaries (including Cairn India and Capricorn), as appropriate.
Ø "Cairn India" where referred to in the release means Cairn India Limited and/or its subsidiaries, as appropriate.
Ø Cairn has previously focused its activities on the geographic region of South Asia, resulting in a significant number of oil and gas discoveries. In particular, Cairn made a major oil discovery (Mangala) in Rajasthan in the north west of India at the beginning of 2004. Cairn has now made more than 20 discoveries in Rajasthan block RJ-ON-90/1.
Ø Cairn India is headquartered in Gurgaon on the outskirts of Delhi, with operational offices in Chennai, Gujarat, Andhra Pradesh and Rajasthan.
For further information on Cairn please go to: www.cairnenergy.com