Vedanta, Cairn Get Approvals for Merger

INDORE, India - March 29, 2017 - PRLog -- Global diversified natural resource majors, Vedanta Ltd and Cairn India Ltd have received all regulatory approvals for their merger, except the Reserve Bank of India's (RBI) approval for issue of preference shares, the company spokesman said.

The merger will be made effective upon getting of the RBI approval. The approvals include transfer of participating interest of Cairn India in fields such as Rajasthan oilfield and Ravva Oil & Gas fields in Krishna Godavari basin to Vedanta Ltd. The company has now obtained all the requisite approvals concerning the Scheme of Arrangement between Vedanta Ltd and Cairn India Ltd, the two companies said in identical statements.

In 2011 the Govt had set rigorous conditions for approving Vedanta's takeover of Cairn India. It made Cairn agree to royalties paid by state-owned ONGC on its most important Rajasthan oilfields, being cost recoverable from oil sales. ONGC owns 30% interest in the Rajasthan oilfields but used to pay royalty of 20% of crude oil price realized on all of output including 70% share of Cairn.

The tax department has frozen 9.8% remaining stake of Cairn Energy in Cairn India over the alleged capital gains made in 2006-07 internal business reorganization.

Cairn India's shareholders will now get one equity share of Vedanta Ltd and four redeemable preference shares of face value of Rs. 10 and coupon 7.5%, as against the proposal of one equity share, and one preference share earlier. Both companies had announced the merger plans in June 2016, which would access the Vedanta Ltd to the cash of Cairn India, helping it cut debt.

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