Jeu 17 Mar 2011 14:11
Cairn, Vedanta may extend April 15 deadline for deal
17 MAR, 2011, 06.12AM
NEW DELHI: Cairn Energy and Vedanta Resources are expected to extend the April 15 deadline to conclude the $9.6-billion Cairn-Vedanta deal if they don't have enough time for the mandatory open offer to shareholders after the cabinet's approval, although Cairn maintained that it is still optimistic about meeting the cut-off date.
The companies are waiting for the cabinet's verdict before they approach their shareholders for extending the deadline if they need more time, two people with direct knowledge of the matter said. Cairn chief Bill Gammell met the oil secretary on Wednesday.
The $9.6-billion deal is running against the time after Gammell told the government that he would stick to the April 15 deadline. "We will stick to the April 15 deadline. It's in the government's hands and it has to take a decision," Gammell told reporters after meeting officials in the oil ministry. "I am positive and hopeful. I see the transaction going forward. We had a positive and constructive dialogue with the government," he said.
Oil ministry officials, who did not want to be identified, said the companies may be trying to put pressure on the government by saying they won't extend their deadline. "They are businessmen and they will extend the deadline if the deal is profitable... They put pressure by saying that the deal will lapse," one official in the ministry said. "Why are they (Cairn and Vedanta) lobbying if they are not willing to extend the deadline? As per them the time has already lapsed," one ministry official said referring to a letter written by Vedanta on January 28.
In the letter, CEO MS Mehta had said that the company would take 55-60 days time to complete the open offer mandatory to conclude the transaction. Both Cairn and Vedanta declined comments. Government officials say that the transaction is expected to be taken up by the cabinet for its approval only after the budget session of Parliament next week. This would give less than 20 working days to Cairn and Vedanta to complete all formalities including the mandatory offer which is kept open for at least 21 days.
Industry persons close to Cairn and Vedanta say that the two companies want a solution which would not affect the valuation of the deal. "Any condition to accept ONGC's contention that royalty is cost recoverable is bound to affect Cairn India's valuation and shareholders would not approve it," the person with direct knowledge of the matter said. The two companies are even uncomfortable with the oil ministry's softer option where it has recommended the cabinet to first clear the deal and settle the royalty issue through legal means later.
"This would become a future liability for Vedanta," the person said. Both companies are willing to terminate the transaction if the cabinet accepts the oil ministry's original conditions to approve the deal, the person said. The original recommendations of the oil ministry asks Cairn to accept its partner ONGC's claims of recovering the royalty cost from the field's revenue before calculating profit and abide by government directives on paying cess.
Ce que l'on conçoit bien, s'énonce clairement, Et les mots pour le dire arrivent aisément. BOILEAU