After agreeing to accept all government conditions to get approval for stake sale in its Indian unit to Vedanta Resources, UK's Cairn Energy Plc has written to state-owned ONGC seeking a no-objection certificate for the deal by September 21.The government wants Cairn India to agree to pay royalty and cess on its all important Rajasthan block and seek consent of partner Oil and Natural Gas Corp before its control can be transfered to London-listed mining group Vedanta.
Cairn India is opposed to the riders but its parent firm has demanded these be voted by shareholders where it along with Vedanta will vote for their acceptance.
While the postal ballot being conducted by Cairn India will be completed by September 14, Cairn Energy wants ONGC to immediately begin process of giving NOC so as to wrap up the transaction quickly.
In normal course, Cairn Energy would have written to ONGC seeking formal waiver of the pre-emption rights by the state-owned firm, which holds stakes in 8 out of 10 properties of Cairn India, including the mainstay Rajasthan block, after shareholder vote.
Thereafter, ONGC would have done its due diligence of acquiring Cairn India at $6 billion, and taken the matter to the board, a process which would have taken 45
days.
To cut that process short, Cairn Energy Managing Director and CFO Jann Brown on August 16 wrote to ONGC Chairman and Managing Director A K Hazarika to begin the process now so that NOC is granted by September 21.
"We would very much appreciate your prompt attention to this matter and would be very grateful if you could be fully prepared to provide the NOC," he wrote.
Cairn Energy holds 52.11 per cent stake in Cairn India while Vedanta has another 18.5 per cent and both will vote for acceptance of the government pre-conditions.
"We have advised Cairn India and the Government of our intention to vote our 52 per cents stake in favour of these conditions and will recommend their adoption by the Cairn India board," he wrote.
"Cairn India will announce the result of this vote on September 14 and we would expect Cairn India to write to you immediately on confirmation of the results of this ballot to request your NOC."
When contacted, Cairn Energy spokesperson said: "We are merely requesting ONGC to help satisfy the conditions put in place by the Government of India."
Cairn Energy will get $6.02 billion from selling 40 per cent stake in Cairn India to London-listed mining group Vedanta.
