After months of silence, India’s Ministry of Home Affairs has given Cairn Energy the security clearance it required to sell a majority stake of its Indian assets to UK-based mining giant Vedanta. Cairn India also received a no-objection certificate from its state-owned Indian joint venture partner, Oil and Natural Gas Corporation (ONGC).
Vedanta has acquired 58.5% of Cairn India for US$8.67 billion. This includes a 20% stake that is held by its Sesa Goa subsidiary.
Cairn said it would now return roughly US$3.5 billion of the sale proceeds to shareholders. Shareholders are expected to have a choice as to when and in what form they receive the cash.
The deal, which was originally agreed in August 2010, turned out to be a regulatory roller-coaster ride for both parties (see Waiting for a nod, India Business Law Journal volume 4 issue 9). Additional complications arose as a result of an an old dispute over royalty payments between Cairn India and ONGC. The issue was finally resolved with both sides renegotiating their production-sharing contract.
Cairn India has 11 oil and gas blocks in India and Sri Lanka. It made one of its most successful oil discoveries in Mangala, Rajasthan, in 2004 and has subsequently made over 20 discoveries in the Rajasthan block.
Allen & Overy, Latham & Watkins, AZB & Partners and Conyers Dill & Pearman advised Vedanta on the deal, while Shepherd and Wedderburn, Amarchand Mangaldas and S&R Associates advised Cairn. Linklaters and Talwar Thakore & Associates teamed up to advise the lenders.
