Cairn Energy Plc's deal to sell a majority stake in its Indian arm to Vedanta Resources for up to $8.48 billion is contingent upon the billionaire Anil Agarwal-led group completing an open offer to minority shareholders of Cairn India, a senior official said.
Vedanta Resources Group is yet to get market regulator SEBI's approval for an open offer to acquire up to a 20 per cent stake from minority shareholders at a price of Rs 355 a share, Rs 50 less than what it is paying Cairn Energy for a majority stake.
The conclusion of the deal is "conditional to completion of open offer in India," Cairn Energy CEO Bill Gammell said after a 45-minute meeting with Oil and Natural Gas Corp (ONGC) Chairman and Managing Director R S Sharma.
The open offer, as per the schedule announced by Vedanta last month, is to open on October 11. Gammell said Cairn Energy will call an extraordinary general meeting (EGM) of its shareholders in early October to seek ratification of the Vedanta deal.
But the shareholders' nod will mean nothing unless Vedanta is able to complete the open offer in India, he said.
Gammell met Sharma for the second time since announcing the deal to sell a 40 to 51 per cent stake in Cairn India -- the firm that operates the giant Rajasthan oilfield -- to Vedanta on August 16.
ONGC insists that Cairn Energy cannot sell a stake to Vedanta without its approval, as it has the preemption or right of first refusal by virtue of its participating interest in the Rajasthan oilfield and two other producing assets of Cairn India.
Gammell said his meeting with Sharma was "good." Cairn Energy, he said, believes that the deal does not trigger ONGC's preemption right as it is a corporate transaction between two parties and not the sale of stake in any particular field that normally gives partners ROFR.
He, however, refused to say if ONGC had diluted its position. "But I am very positive."
ONGC has a 30 per cent interest in the 6.5 billion barrel Rajasthan fields, the centrepiece of the Cairn-Vedanta deal.
Gammell said the state-owned firm had not asked for operatorship of the Rajasthan field in return for waiving its preemption rights. Cairn Energy had last week written to ONGC saying its nod for the Vedanta deal is not required, as Cairn India will continue to exit.
"There is no real change (happening at) Cairn India," he said today. "This is just a corporate deal (involving sale of shares by one party and purchase by another)." Vedanta is paying Cairn Energy Rs 405 per share for a 40 to 51 per cent stake in Cairn India.
This includes a Rs 50 non-compete fee to keep the Edinburgh-based firm out of India, Pakistan, Bangladesh and Sri Lanka for three years.
