481UKP million return of cash
Cairn Energy PLC
27 February 2007
EMBARGOED FOR RELEASE AT 0700
27 February 2007
CAIRN ENERGY PLC ('Cairn')
£481 million return of cash to shareholders
Cairn announces the proposed return of approximately £481 million of the
proceeds from the flotation of its Indian business, Cairn India, to
Shareholders.
Highlights
• Shareholders to receive £3.00 for each Existing Ordinary Share held
• Return to be implemented by way of a B share scheme with a view to providing
UK tax resident shareholders with flexibility to elect to receive cash in
the form of income or capital or a combination of both
• One B share for every one Existing Ordinary Share held
• 13 for 16 share consolidation to seek to maintain comparability of share price
and earnings per share
• EGM to approve the return on 22 March 2007
Sir Bill Gammell, Chief Executive of Cairn Energy PLC, commented:
'Following the successful flotation of Cairn India the return of cash to
shareholders has been a key priority and I am delighted to be announcing this
earlier than was previously anticipated.
Shareholders will receive £3.00 per share and the remainder of the proceeds will
currently be retained by the business with the aim of creating and realising
further value for shareholders in the future.'
Introduction
On 9 January 2007, the Group's Indian business was floated on the Bombay Stock
Exchange and National Stock Exchange of India, pursuant to Cairn's strategy of
increasing the autonomy of that business and of realising value for
Shareholders.
The Company now proposes to return to Shareholders approximately £481 million of
the cash realised from that flotation, representing a return of £3.00 for each
Existing Ordinary Share held by Shareholders on 23 March 2007. The remainder of
the proceeds will currently be retained to fund the Group's business, thereby
providing financial flexibility to support the growth of Capricorn, with the aim
of creating and realising further value for Shareholders in the future.
This return of cash is proposed to be made in a manner that should provide
certain Shareholders with an element of choice as to when and in what form they
receive the cash.
Return of Cash
The Return of Cash is proposed to be made by means of a B Share structure, in
terms of which each Shareholder will receive:
For each Existing Ordinary Share held on 23 March 2007 - 1 B Share
For every 16 Existing Ordinary Shares held on 23 March 2007 - 13 New Ordinary
Shares
The B Shares will not be listed on the Official List or admitted to trading on
the London Stock Exchange. The New Ordinary Shares will be listed on the London
Stock Exchange and will replace the Existing Ordinary Shares.
The choices which will be available to holders of B Shares in respect of the
Return of Cash, if approved by Shareholders at the EGM, are summarised below.
The B Share Choices
Under the Return of Cash, Shareholders will have the following three choices in
relation to the B Shares held by them on the B Share Record Date, although
certain Shareholders resident outside of the United Kingdom will only be
entitled to receive the Single B Share Dividend (being Choice 1 below).
Shareholders resident in the United Kingdom should read the Circular carefully
as it explains the United Kingdom tax consequences of the three choices under
current law. Any Shareholder who is in any doubt as to his tax position, or who
is resident for tax purposes in a jurisdiction other than the United Kingdom,
should consult an appropriate professional adviser without delay.
Save as noted above, Shareholders may elect to receive any one of, or a
combination of, the B Share Choices.
Choice 1: Single B Share Dividend
Shareholders can elect in respect of all or some of their B Shares, to receive a
single dividend of £3.00 per B Share. The dividend will become payable on 4
April 2007, following which those B Shares which have been so elected will be
automatically converted into Deferred Shares with a negligible value.
The Single B Share Dividend will be taxed as income, as more fully described in
the Circular.
Choice 2: Initial Purchase Offer
Shareholders can elect in respect of all or some of their B Shares, to have
those B Shares purchased by Hoare Govett on 4 April 2007 at £3.00 per B Share,
free of all dealing expenses and commissions. Details of the terms of the offer
to be made by Hoare Govett are set out in paragraphs 4 to 7 of Part III of the
Circular. In particular, Shareholders should note that Hoare Govett may decide
not to make the offer if certain force majeure events were to occur.
It is expected that the proceeds from this purchase should be treated as capital
for United Kingdom tax purposes on the basis of current practice.
Choice 3: Future Purchase Offer
Shareholders, who elect for this choice in respect of all or some of their B
Shares, will retain those B Shares for the time being. It is likely that
Shareholders will be given the opportunity to sell further B Shares to Hoare
Govett on 10 April 2007 at £3.00 per B Share, free of all dealing expenses and
commissions. If this is the case (and assuming there has been no change in
current practice) the proceeds from this Future Purchase Offer should also be
treated as capital for United Kingdom tax purposes.
Share Capital Consolidation
The aggregate amount proposed to be returned to Shareholders pursuant to the
Return of Cash is equivalent to approximately 18.75 per cent. of the market
capitalisation of the Company at the close of business on 23 February 2007
(being the latest practicable date before the publication of the Circular).
The effect of the Share Capital Consolidation is that the Existing Ordinary
Shares will be replaced by the New Ordinary Shares so as to reduce the number of
shares in issue to reflect the amount of cash to be returned to Shareholders.
The aim of this is to seek to make the market price of a Cairn share comparable
before and after the Return of Cash, subject to normal market movements
following the date of the Circular.
The ratio used for the Share Capital Consolidation has been set by reference to
the closing middle-market price of £16.00 per Existing Ordinary Share on 23
February 2007. On that basis, the Share Capital Consolidation will result in
each Existing Ordinary Share being subdivided and consolidated into 0.8125 of a
New Ordinary Share. Fractional entitlements arising from the Share Capital
Consolidation will be aggregated and sold in the market on behalf of the
relevant Shareholders. The proceeds of sale are expected to be sent to
Shareholders on 11 April 2007 (or, if less than £3.00 in the case of any one
Shareholder, donated to charities chosen by the Board). The value of any one
Shareholder's fractional entitlement will not exceed the value of one New
Ordinary Share.
As all ordinary shareholdings in the Company will be consolidated, the number of
shares held by each Shareholder will reduce but Shareholders' percentage
holdings in the issued ordinary share capital of the Company will (save in
respect of fractional entitlements) remain unchanged immediately following the
Share Capital Consolidation.
Similarly, although the nominal value of each Ordinary Share will change from 10
pence to 6 2/13 pence, the New Ordinary Shares will be equivalent in all
material respects to the Existing Ordinary Shares, including their dividend,
voting and other rights and will be admitted to trading in the same way as the
Existing Ordinary Shares.
Following the Share Capital Consolidation, the Company's authorised equity share
capital will comprise 365,625,000 New Ordinary Shares and, assuming no further
shares are issued between 23 February 2007 and the date on which the Share
Capital Consolidation becomes effective; its issued equity share capital will
comprise 130,249,576 New Ordinary Shares.
Circular
The Circular to shareholders in connection with the Return of Cash will be
posted to Shareholders today. The EGM seeking Shareholder approval for these
proposals will be held at 2.15 p.m. on 22 March 2007.
The Circular will shortly be available to the public for inspection at the UK
Listing Authority's Document Viewing Facility, which is situated at:
Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS
Tel No. +44 (0)20 7066 1000, during normal business hours on any weekday
(Saturdays, Sundays and public holidays excepted).
The Circular will also shortly be available on the Investor Relations section of
Cairn's website at www.cairn-energy.plc.uk.
Enquiries to:
Analysts/Investors Tel: 0131 475 3000
Sir Bill Gammell, Chief Executive
Jann Brown, Finance Director
Media Tel: 0207 404 5959
Brunswick Group LLP:
Patrick Handley, Mark Antelme, Phoebe Buckland
Key dates
A detailed timetable is set out in Part II of the Circular. The following are
key dates in respect of the Return of Cash:
Latest time and date for receipt of Electronic Proxy Instruction, CREST, Proxy
Instruction or Form of Proxy for EGM - 2.15 p.m. on 20 March 2007
EGM - 2.15 p.m. on 22 March 2007
Latest time and date for receipt of Election Forms and TTE Instructions from
CREST holders in relation to the B Share Alternatives and Election Form
Effective Date - 11.00 a.m. on 3 April 2007
Despatch of cheques or bank accounts credited, as appropriate, in respect of the
Single B Share Dividend (Choice 1) - 11 April 2007
Despatch of cheques or CREST accounts credited, as appropriate, in respect of
the B Shares purchased on the Initial Purchase Date (Choice 2) - 11 April 2007
These dates may, however, be subject to change.
Definitions
The following definitions apply throughout this announcement:
'B Shares' - the unlisted limited voting preference shares of 5 pence each in the
capital of Cairn, the rights and restrictions of which are set out in the
Circular;
'B Share Choices' - the choices of the Single B Share Dividend, the Initial
Purchase Offer and the retention of B Shares until any Future Purchase Offer (if
any) is made;
'B Share Record Date' - 6.00 p.m. on 3 April 2007 (or such other time and/or date
as the board of directors of the Company may determine);
'Cairn' - Cairn Energy PLC;
'Cairn India' - Cairn India Limited;
'Capricorn' - Capricorn Energy Limited and its subsidiaries;
'Capital Reorganisation' - the reorganisation of Cairn's share capital comprising
(i) the subdivision of each Existing Ordinary Share held by a holder on 23 March
2007 at 6.00 p.m. into two intermediary unclassified shares and the
reclassification of one in every two of those shares as one B Share in the
manner set out in the special resolution in the notice convening the EGM set out
at the end of the Circular and (ii) the Share Capital Consolidation;
'Circular' - the circular to be sent to Shareholders dated 27 February 2007
relating to the Return of Cash;
'Deferred Shares' - the unlisted non-voting deferred shares of 5 pence each in the
capital of Cairn, the rights and restrictions of which are set out in the
Circular;
'EGM' - the extraordinary general meeting of Shareholders to be held at 2.15 p.m.
on 22 March 2007 in connection with the Return of Cash, notice of which is
contained at the end of the Circular;
'Existing Ordinary Shares' - issued ordinary shares of 10 pence each in the
capital of Cairn existing before the Capital Reorganisation;
'Future Purchase Offer' - the offer expected to be made by Hoare Govett, acting as
principal, to purchase B Shares retained by Shareholders following the Initial
Purchase Offer;
'Group' - Cairn and its subsidiary and associated undertakings;
'Hoare Govett' - Hoare Govett Limited or, in connection with either the Initial
Purchase Offer or (if one is made) any Future Purchase Offer, ABN AMRO Bank
N.V., London Branch represented by Hoare Govett Limited;
'Initial Purchase Offer' - the initial offer by Hoare Govett, acting as principal,
to purchase B Shares on 4 April 2007 (or such other date as the Directors may
determine);
'London Stock Exchange' - London Stock Exchange plc;
'New Ordinary Shares' - following the Capital Reorganisation, the new ordinary
shares of 6 2/13 pence each in the capital of the Company admitted to the
Official List and which will replace the Existing Ordinary Shares;
'Official List' - the official list maintained by the UK Listing Authority for the
purposes of Part VI of the Financial Services and Markets Act 2000 (as amended);
'Return of Cash' - the transaction comprising the Capital Reorganisation and the B
Share Choices;
'Shareholders' - holders of Existing Ordinary Shares, New Ordinary Shares and / or
B Shares, as the context may require;
'Share Capital Consolidation' - the subdivision and consolidation of the Existing
Ordinary Shares in the manner set out in the special resolution in the notice
convening the EGM set out at the end of the Circular;
'Single B Share Dividend' - the dividend of £3.00 per B Share;
'UK or United Kingdom' - the United Kingdom of Great Britain and Northern Ireland;
and
'UK Listing Authority' - the Financial Services Authority acting in its capacity
as a competent authority for the purposes of Part VI of the Financial Services
and Markets Act 2000 (as amended).
This information is provided by RNS
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