Cairn Energy removes non-compete fee on Vedanta deal

Scottish explorer Cairn Energy Plc today agreed to lower price at which it will sell up to 40% stake in its Indian unit to mining group Vedanta Resources, possibly taking into account the stringent condition the government has put for approving the deal.

Cairn agreed to do away with Rs 50 per share non-compete fee and will now sell 40% stake in Cairn India in two tranches at Rs 355 per share. The Edinburgh-based firm will now get $6.02 billion from sale of majority of its 62.4% stake in Cairn India to London-listed mining group headed by billionarie Anil Agarwal.

"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, which are expected to result in a 5.3% reduction in post-tax proceeds," Cairn Energy said in a statement.

The transaction will take place in two tranches: an initial sale of a 10% stake in Cairn India, and a subsequent sale of a 30% stake which remains subject to receipt of the necessary consents and approvals from the government of India.

"Gross proceeds for the sale of a 40% interest in Cairn India will amount to $6.023 billion with net proceeds expected to be approximately $5.408 billion in cash," it said.