In the first indication of Cairn Energy Plc's willingness to accept government conditions for selling its Indian unit to Vedanta Resources, the Edinburgh- based firm on Monday agreed to lower the sale price by over Rs 3,800 crore.
Cairn Energy will sell its 40 per cent stake in Cairn India to Vedanta at Rs 355 per share instead of Rs 405 a share agreed in August last year. It will now get a gross proceeds of Rs 27,007 crore (about $6.02 billion) instead of Rs 30,811 crore ($6.84 billion) it was initially expecting.
"Cairn and Vedanta have agreed to certain adjustments to the transaction sale and purchase agreement for the sale of part of Cairn Energy PLC's shareholding in Cairn India, involving the removal of the non-compete arrangements and associated fee," the two firms said in separate statements.
The Scottish explorer has for the past 10 months denied need for government approval to what it called a corporate transaction. It also rejected both the requirement of nod and pre-emption of partner Oil and Natural Gas Corp (ONGC), which holds stake in 8 out of 10 properties of Cairn India including the crown-jewel Rajasthan block.
The government has refused to give its approval to the deal which was initially valued at $9.6 billion (including the mandatory open offer Vedanta Group had to make to minority shareholders of Cairn India) unless Cairn agreed to the requirement of partner consent.
Cairn and its successor have to agree to making royalty ONGC pays on entire crude output from Rajasthan despite owning only 30 per cent, as recoverable from sale of oil. ONGC had cited provisions of the contract months before the deal was announced, to demand that royalty be made cost recoverable.