Cairn puts up a brave face

Putting up a brave face, Cairn Energy said that it will continue to work in close cooperation with the Government.

Cairn's statement came soon after the Cabinet Committee on Economic Affairs (CCEA) decided to refer the Cairn Energy-Vedanta Resources stake sale deal to a ministerial panel.

“Cairn and Vedanta will continue to work with the Government of India to secure the necessary consents and approvals,” a Cairn spokesperson said.

This would also mean that Cairn Energy Plc will have to go back to its stakeholders to seek an extension of deadline of April 15 to complete the deal. It also means that the Cairn Energy shareholders have missed an immediate opportunity to monetise an exploration opportunity in India.

Besides, Cairn Energy also wanted to use this money earned from its stake sale in Cairn India for exploration activities in Greenland. The company in the summer of 2010 (August), when it had proposed to sell stake to Vedanta Resources had said, “This transaction is an opportunity to realise value from our strategic stake, return significant capital to shareholders and return Cairn to doing what it does best: taking an entrepreneurial approach to exploring for new hydrocarbon sources in frontier basins so providing shareholders with exposure to future transformational potential.”

Now in absence of mandatory approvals, the two (Cairn Energy and Vedanta Resources) companies will need to reach a mutually agreed date and seek their shareholders approval for extension of the deadline.

COMMENT NOW