Edinburgh-based Cairn Energy Plc on Thursday said it has for the second time extended the closing date for the sale of a majority stake in its Indian unit to Vedanta Resources in order to secure the necessary government approvals.
Cairn , which had previously threatened that the $9.6 billion deal would fall through if not closed within the deadline approved by its own and Vedanta shareholders, did not state what the new deadline for closing the transaction will be.
April 15 was the original deadline for closing the transaction, which was originally announced on August 16. It was extended to May 20 and a day before even that deadline expires, the two firms have now agreed to extended it by an unknown period.
"Cairn has been informed that the Cabinet Committee on Economic Affairs which met on April 6 to discuss the Cairn-Vedanta transaction has referred the matter to a Group of Ministers (GoM). The GoM has not yet met," the company said in a statement.
"Accordingly, the two companies have agreed to extend the closing date of their Sale and Purchase Agreement in order to secure the necessary consents and approvals from the government of India to complete the transaction," it said.
The GoM headed by Finance Minister Pranab Mukherjee is scheduled to meet on May 27, but it is unclear if the panel would take more than one meeting to vet the proposal, after which it has to go back to the CCEA -- the final approval authority in this case.
A Cairn Energy spokesperson said the company will wait for the "GoM opinion" to decide on future of the deal.
However, he refused to answer questions on how long the two firms will wait for the GoM opinion.
Cairn said Vedanta subsidiary Sesa Goa has netted 155 million Cairn India shares, representing 8.1 per cent of the share capital, in an open offer. Furthermore, Sesa has bought a 10.4 per cent stake from Petronas International Corp of Malaysia, raising its total holding in Cairn India to 18.5 per cent.
"Accordingly, on completion of the transaction, Cairn will sell a stake in Cairn India to Vedanta equivalent to 40 per cent of the share capital, following which Cairn will hold a residual interest of 21.7 per cent of the share capital," the company added.
Cairn, which had previously set April 15 as the deadline for concluding the sale, had raised a hue and cry over the government's procrastinated approach to vetting the deal, saying the timelines were sacrosanct and could not be extended.
But a day after the CCEA on April 6 referred the deal for vetting to the GoM, the deadline was extended to May 20. And on Thursday, it extended it again for an unknown period.