Cairn Energy extends Vedanta deal deadline again

Edinburgh-based Cairn Energy Plc on Thursdaysaid it has for the second time extended the closing date for the sale of amajority stake in its Indian unit to Vedanta Resources in order to secure thenecessary government approvals.

Cairn , which had previously threatened thatthe $9.6 billion deal would fall through if not closed within the deadlineapproved by its own and Vedanta shareholders, did not state what the newdeadline for closing the transaction will be.

April 15 was the original deadline forclosing the transaction, which was originally announced on August 16. It wasextended to May 20 and a day before even that deadline expires, the two firmshave now agreed to extended it by an unknown period.

"Cairn has been informed that theCabinet Committee on Economic Affairs which met on April 6 to discuss theCairn-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 haveagreed to extend the closing date of their Sale and Purchase Agreement in orderto secure the necessary consents and approvals from the government of India tocomplete the transaction," it said.

The GoM headed by Finance Minister PranabMukherjee is scheduled to meet on May 27, but it is unclear if the panel wouldtake more than one meeting to vet the proposal, after which it has to go backto the CCEA -- the final approval authority in this case.

A Cairn Energy spokesperson said thecompany will wait for the "GoM opinion" to decide on future of thedeal.

However, he refused to answer questions onhow long the two firms will wait for the GoM opinion.

Cairn said Vedanta subsidiary Sesa Goa hasnetted 155 million Cairn Indiashares, 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 InternationalCorp of Malaysia, raisingits total holding in Cairn Indiato 18.5 per cent.

"Accordingly, on completion of thetransaction, Cairn will sell a stake in Cairn India to Vedanta equivalent to 40per cent of the share capital, following which Cairn will hold a residualinterest of 21.7 per cent of the share capital," the company added.

Cairn, which had previously set April 15 asthe deadline for concluding the sale, had raised a hue and cry over thegovernment's procrastinated approach to vetting the deal, saying the timelineswere sacrosanct and could not be extended.

But a day after the CCEA on April 6referred 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.