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Journalism of Courage
Ignoring the objections raised by minority shareholders of Cairn India,Cairn Energy Plc of the UK has asked its Indian arm to accept all the government conditions and agree to pay royalty and cess on the Rajasthan oilfields so as to facilitate its stake sale to Vedanta Resources. The UK parent,which owns a 52.11 per cent stake in Cairn India,has voted to accept (government) conditions,the company said in a statement.
Cairn Indias minority shareholders had raised objections to conditions put forward by the government for the completion of the Cairn Energy-Vedanta Resources stake sale. The discussion on conditions laid by the government came up at the AGM of Cairn India on August 18. Though minority shareholders also wanted a separate resolution to reject the governments conditions,they were unsuccessful. The UK firm,which is selling a 40 per cent stake in Cairn India to Vedanta,has till now maintained that forcing its Indian unit to pay royalty and cess on the mainstay Rajasthan oil block was against the signed contract and would hurt minority shareholders interest. Two of the government conditions cess and royalty payable are currently with Cairn India shareholders for approval,Cairn has voted to accept the conditions,with voting results due on September 14, Cairn Energy said.
Simon Thomson,chief executive,Cairn Energy said: Cairn is encouraged that the Vedanta transaction is moving towards completion. Following approval from the Government of India,all parties are now working to satisfy the consents and conditions to complete the sale to Vedanta as soon as possible. The sale of Cairns 40 per cent stake will allow a return of substantial funds to shareholders and will also provide the Group with the balance sheet strength and financial flexibility to explore new opportunities in line with its consistent strategy of seeking transformational growth. Together with Vedantas 28.5 per cent shareholding,Cairn Energy has enough votes to get any proposal passed by its shareholders,ignoring the resolution passed by the Cairn India board opposing the value demolishing preconditions.
