Vedanta deal will be in place by Sept, says Cairn Energy

[LesCrozes]

Vedanta deal will be in place by Sept, says Cairn Energy
LONDON, AUG. 23, 2011
Cairn Energy struck a confident note on the Vedanta deal, telling the investor community that the final stages of the approval process could be wrapped up as early as next month.

“With a fair wind we could have them in place by the end of September,” Ms Jann Brown, Managing Director and Chief Finance Officer, Cairn Energy, told analysts on a conference call as the company published its half-year results.

However, the company confirmed the net value of the deal to be at $5.4 billion — $1.4 billion for the 10 per cent tranche and $4 billion for the second 30 per cent. It is substantially less than the $8 billion it had previously anticipated.

The results of the Cairn India shareholder vote on whether or not to accept the Indian government's conditions on cess and royalty are due on September 14, though the results determined by a simple majority are a foregone conclusion. Cairn Energy, which holds a 52 per cent stake in Cairn India, confirmed on Tuesday that it had voted to accept conditions. The next step is the receipt of a no-objection certificate from ONGC, which it has requested to receive on September 21.

The Indian government has imposed a 30-day deadline on gaining the necessary consents and approvals but Ms Brown said the company had applied for an extension formally, and had had informal indications that it would not be an issue. “But we have learnt not to make predictions,” added Ms Brown, who took over as Managing Director during the major overhaul of top management in June, when Mr Simon Thomson took over as CEO, replacing Sir Bill Gammell.

H1 REVENUE RISES

It came as Cairn Energy reported that group revenue rose to $1.3 billion in the first half of 2011 against $333 million in the same period the year before, largely as a result of increased production in Rajasthan, which doubled its gross field production to 166,527 barrels of oil equivalent a day. The Mangala field currently produces 125,000 barrels of oil a day, and Bhagyam is scheduled to begin production in the last quarter of this year. The sale of the 40 per cent stake in Cairn India would allow the company to return “substantial funds” to shareholders, Ms Brown said, as well as an opportunity to re-shape its future.

The company is already beginning to look beyond the Vedanta transaction. On Tuesday, it announced that it has formed a consortium to bid for gas exploration rights off the coast of Lebanon as it tries to diversify its portfolio beyond Greenland, where it is the largest acreage holder.

[Clint]

Vedanta Said to Receive Final Commitments for Cairn India Loan

Bloomberg August 24, 2011 04:00 AM
Wednesday, August 24, 2011

Aug. 24 (Bloomberg) -- Vedanta Resources Plc has received final commitments from the 13 banks involved in financing its takeover of Cairn Energy Plc's domestic unit, according to a person familiar with the matter.

The total loan size has been reduced to $2.97 billion from $3.5 billion due to a royalty payment sharing arrangement being negotiated with state-run Oil & Natural Gas Corp. to develop an oil field in Rajasthan, the person said, asking not to be identified as details are private.

The loan now consists of a 12-month facility with a six month extension of $1.57 billion, and a second $1.4 billion, 3- year facility, the person said. The latter pays a margin of 325 basis points more than the London interbank offered rate for the first two years, stepping up to 350 basis points in the third, while the former pays a 175 basis point-margin, stepping up to 210 for the last six months, the person said.

Vedanta Resources, the metals producer which has headquarters in London and is controlled by Indian billionaire Anil Agarwal, has waited 11 months to clinch a deal that gives it access to India's biggest onshore oil deposit. It began talks with banks to finance the purchase in January.

Five banks -- UniCredit SpA, Bank of China Ltd., Bank of America Corp., DBS Group Holdings Ltd. and Industrial & Commercial Bank of China Ltd. -- have since joined the original eight hired the arrange the loan, the person said.

UniCredit committed $350 million, Bank of China $200 million, Bank of America $100 million, DBS $50 million and ICBC $30 million, the person said.

Of the eight originally hired, Royal Bank of Scotland Group Plc lent $500 million, Barclays Plc, Credit Suisse Group AG and Citigroup Inc. lent $350 million each, Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley lent $200 million each and Standard Chartered Plc lent the balance, the person said.

The loan is expected to be signed once final approvals for the transaction are received, the person said. Vedanta got conditional approval from the Indian government to acquire the majority stake in Cairn India Ltd. on Aug. 1. The oil company is now seeking approval for the conditions from shareholders, who are required to vote on the transaction by Sept. 10.


http://www.sfgate.com/cgi-bin/article.c ... SGRD0A.DTL

[phili675]

Press Trust of India / New Delhi August 30, 2011, 18:44 IST

State-owned Oil and Natural Gas Corporation (ONGC) today said it might on September 27 decide on giving its consent to UK's Cairn Energy Plc selling majority stake in Cairn India to London-listed Vedanta Resources.

[phili675]

0 AUG, 2011, 07.46PM IST, PTI
May give consent on September 27 for Cairn-Vedanta deal: Oil and Natural Gas Corp




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NEW DELHI: State-owned Oil and Natural Gas Corp (ONGC) on Tuesday said it may on September 27 decide on giving its consent to UK's Cairn Energy Plc selling majority stake in Cairn India to London-listed Vedanta Resources.

ONGC, which holds stake in 8 out of the 10 oil and gas properties Cairn India has in the country, holds pre-emption or right of first refusal.

"We have to do valuation of the properties if ONGC should buyout Cairn India or not. A lot of work is being done... we are in the process of doing due diligence. The final call will be taken by the company board which is slated to meet next on September 27," ONGC Chairman and Managing Director A K Hazarika told reporters here.

Cairn Energy has agreed to accept all government conditions, including sharing royalty and paying cess on the all important Rajasthan oil block. Since, Cairn India is opposed to the riders, it has demanded that company shareholders should vote on acceptance of them. Cairn Energy with 52.11 per cent stake and Vedanta's 28.5 per cent are all set to overrule Cairn India and accept the conditions.

"They (Cairn Energy) have written to us, saying they are accepting the conditions and results of the shareholder vote will be announced by September 14. Thereafter, they will write to us for no-objection certificate and we will take it to the next board meeting," he said.

Thus far, Cairn Energy had rejected existence of any pre- emption rights of ONGC and its deal to sell 40 per cent stake in Cairn India triggering them. But the government approval to the USD 9 billion deal made it conditional on Cairn getting a no-objection certificate from ONGC.

"NOC and right of first refusal are the same thing," Hazarika said, adding that the company board will have to decide if acquiring Cairn India at Rs 355 per share -- the price Vedanta is paying Cairn Energy -- was economical to it.

Cairn Energy Managing Director and CFO Jann Brown on August 16 wrote to Hazarika asking ONGC to begin the process of deciding on its consent so that NOC is granted by September 21.

Hazarika said Cairn has to first apply formally requesting waiver of the ROFR, or in other words a consent for its deal with Vedanta. That letter Cairn can write only after it accepts to make royalty payments on Rajasthan block cost recoverable and withdraw arbitration challenging Cairn India's liability to pay cess on its 30 per cent stake in the fields.

Cairn India does not pay any royalty on its 70 per cent interest in the Rajasthan fields. The royalty, as per the contract, is paid by ONGC, which got a 30 per cent stake in the 6.5 billion barrel field for free. However, the royalty like other project cost and taxes, is recoverable from revenues earned from sale of oil.