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The Scotsman: Cairn to return GBP 481m to investors after Indian float

EXTRACT: The Edinburgh company, whose chief executive counts US president George Bush and Tony Blair among his friends, bought the exploration block from Shell for little more than GBP 10m.

THE ARTICLE

Martin Flanagan City Editor, The Scotsman – United Kingdom
Published: Feb 28, 2007

EDINBURGH-based oil explorer Cairn Energy is to return GBP 481 million to investors following the flotation on the Indian Stock Exchange of Cairn India Ltd.

Cairn, which raised dollars 1.18 billion from what was India’s biggest IPO in 2006, said shareholders would receive GBP 3 for each share held and the remainder of the proceeds would be retained by the business.

Sir Bill Gammell, the chief executive of Cairn Energy, said: “Following the successful flotation of Cairn India, the return of cash to shareholders has been a key priority and I am delighted to be announcing this earlier than was previously anticipated.

“Shareholders will receive GBP 3 per share and the remainder will be retained by the business with the aim of creating and realising further value for shareholders in the future.”

The return is to be implemented by way of a share scheme to provide UK tax resident shareholders with flexibility to elect to receive cash in the form of income or capital or a combination of both.

One B share will be received for each existing ordinary share held on 23 March 2007. There will also be a 13-for-16 share consolidation “to seek to maintain comparability of share price and earnings per share”, Cairn said yesterday.

The group’s Indian business was floated on the Bombay (Mumbai) Stock Exchange and the National Stock Exchange of India on 9 January 2007. The cash return and share consolidation has to be agreed by an extraordinary general meeting of Cairn shareholders on 22 March, 2007.

Shareholders can elect in respect of all or some of their B shares to receive a single dividend of GBP 3 a share.

It will be paid on 4 April, after which those B shares which have been so elected for the dividend payment will be automatically converted into deferred shares with a negligible value.

Analysts said yesterday that the Indian flotation and the capital return to investors was a major milestone for Cairn, which will now focus on new exploration work across south-east Asia

Cairn will drop out of the FTSE 100 blue-chip index in the first quarterly reshuffle of the index after the cash return is made – probably in June.

Cairn’s shares were trading at under 400p when it announced a 500 million barrel find in Rajasthan, north west India, in January 2004.

The Edinburgh company, whose chief executive counts US president George Bush and Tony Blair among his friends, bought the exploration block from Shell for little more than GBP 10m.

Last night Cairn’s shares closed down 43p at 1,587p.

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