Following Cairn Energy's $5.5bn sale of a large stake in its Indian business to Vedanta Resources, the oil and gas giant has now given details of the long-awaited $3.5bn it intends to return to its lucky shareholders.
Cairn first announced the cash return in December when it completed the disposal of a 30% shareholding in Cairn India for $4.1bn, following the earlier sale of a 10% stake for $1.4bn.
The return of cash will take place as a 'B' share scheme which will give UK tax-payers the chance to receive cash in the form of income or capital, or a blend of both. UK shareholders will have the following three choices, they can: either receive a single dividend of 160p per B share; elect to have their B shares purchased at 160p per share; or elect to sell such B shares at 160p per B share at some point in the future, keeping hold of them for the time being.
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Overseas shareholders will only have the option to receive the dividend.
Cairn also announced a 13-for-33 share consolidation "so as to reduce the number of shares in issue to reflect the amount of cash to be returned to Shareholders", the group said. This move aims to make the market price of the stock comparable before and after the cash return.
"Cairn has returned US$4.5 billion to shareholders in the last five years in line with the Company's strategy of realising value from its successes," said Chief Executive Simon Thomson.
"We are seeking to effect the return of cash in a manner that gives shareholders the most flexibility in terms of how and when they receive their money," he said.
Cairn India, along with its joint venture partner ONGC, is producing 125,000 barrels of oil per day (bopped) from its Rajasthan block. This is expected to plateau at 175,000 bopd which is equivalent to more than a fifth of India's domestic oil production.
A general meeting will be held on 30 January to approve the return of cash, Cairn said.
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