Shareholder Drama At Cairn’s Thinly-Attended, Court-Convened Meeting For Vedanta Merger

Cairn India Ltd.’s thinly-attended, court-convened meeting in Mumbai saw some minority shareholders raise reservations against its merger with Vedanta Ltd.

Cairn India’s shareholder meeting was held under the chairmanship of RA Shah, who was appointed by the Bombay High Court. The meeting witnessed 384 proxies, amounting to 63.9 lakh shares, which constituted 0.34 percent of the share capital.

Shareholder Drama

The shareholder meeting saw some agitated investors oppose the resolution of the proposed merger of the company, on grounds that Cairn India is undervalued for the purpose of the merger. Some shareholders who did not submit their shares at the time of the open offer – at Rs 335 per share – sought better valuations. Vedanta had made an open offer to Cairn India’s minority shareholders when it acquired the company from Cairn Energy Plc. Some shareholders argued that while Cairn India is cash-rich, Vedanta is debt-laden and the merger valuation does not reflect the strengths of the former despite the sweetened offer by the Vedanta Group.

Sudhir Mathur, acting chief executive officer and the chief financial officer of Cairn India, told minority shareholders that lower crude prices had restricted capacity expansion in the sector for the last two years, forcing the company to rework its capital expenditure and operating expenses.

At the time of the open offer (at Rs 335 per share), crude prices were at $110 per barrel. Currently, with crude prices ranging between $45-50 per barrel, the share price is hovering between Rs 190-200 per share, Mathur told shareholders.

The result of the vote is expected by September 13, 2016. The stand of the two large shareholders – Life Insurance Corporation Ltd. and Cairn Energy Plc. – is still unclear. An email to Cairn Energy Plc seeking clarity on its stand remained unanswered.

Vedanta shareholders last week approved the merger at a court-convened board meeting held in Goa.