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Cairn Energy shares rose on Tuesday as the Edinburgh-based oil and gas exploration firm unveiled details of its plans to return $3.5 billion to shareholders, following the completion of its sale of Cairn India to Vedanta Resources last month.
Shareholders of Cairn Energy will receive a £1.60 a share, through a “B” share scheme which will allow UK tax resident shareholders to either receive their payment as capital or income (in some territories it will automatically be received as income). The move is conditional upon shareholder approval at a general meeting on January 30.
Cairn Energy made the commitment to return the cash after the Vedanta Group acquired a 58.5 per cent stake in Cairn India for $8.67 billion, leaving the company with a 22 per cent stake and a cash balance of $4.7 billion.
The remaining $1.2 billion cash from the Cairn India deal will be used towards growth opportunities, the company said.
“Cairn has returned $3.5 billion to shareholders in the last five years in line with the company's strategy of realising value from its successes,” said Mr Simon Thomson, Chief Executive of Cairn Energy.
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