Indian government seizes $216m after sale of part of Cairn’s Vedanta stake
Cairn Energy yesterday said the Indian government had sold part of the Scottish firm’s stakeinvedantaandseizedthe $216 million (£162m) proceeds as arbitration over a long-running tax dispute nears.
The move has cut Cairn’s shareholding in the natural resources group to around 3 per cent and the Edinburghbased firm said the Indian government may reduce the stake further through more sales.
Cairn, led by chief executive Simon Thomson, said it will write down the value of its investment in Vedenta and take an impairment charge in its half year results due to the sale.
The government’s tax departmenthasalreadyseized dividends due to Cairn from its shareholding in Vedanta totalling some $155m as part of enforcement measures over a claim of tax owed following the sale of Cairn’s Indian assets to Vedenta.
Cairn said that the enforcement measures are addressed in the firm’s claim in the arbitration hearing which is due to get underway on 20 August in The Hague.
“The reparation sought by Cairn in the arbitration is the monetary value required to restore Cairn to the position it would have enjoyed in 2014 but for the government of India’s actions,” the company noted.
Cairn said it “continues to have a high level of confidence in the merits of its claims”.
“Cairn is seeking full restitution for losses totalling approximately $1.3 billion resulting from India’s expropriation of its investments in India in 2014, and India’s unfair and inequitable treatment of those investments, due to the imposition of retrospective tax measures,” it added.
In 2015 the Indian government issued Cairn with a draft assessment over tax owed from the Vedanta sale.