27th Feb 2007 07:03
Cairn Energy PLC27 February 2007 EMBARGOED FOR RELEASE AT 0700 27 February 2007 CAIRN ENERGY PLC ("Cairn") £481 million return of cash to shareholders Cairn announces the proposed return of approximately £481 million of theproceeds from the flotation of its Indian business, Cairn India, toShareholders. Highlights • Shareholders to receive £3.00 for each Existing Ordinary Share held • Return to be implemented by way of a B share scheme with a view to providing 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 for every one Existing Ordinary Share held • 13 for 16 share consolidation to seek to maintain comparability of share price and earnings per share • EGM to approve the return on 22 March 2007 Sir Bill Gammell, Chief Executive of Cairn Energy PLC, commented: "Following the successful flotation of Cairn India the return of cash toshareholders has been a key priority and I am delighted to be announcing thisearlier than was previously anticipated. Shareholders will receive £3.00 per share and the remainder of the proceeds willcurrently be retained by the business with the aim of creating and realisingfurther value for shareholders in the future." Introduction On 9 January 2007, the Group's Indian business was floated on the Bombay StockExchange and National Stock Exchange of India, pursuant to Cairn's strategy ofincreasing the autonomy of that business and of realising value forShareholders. The Company now proposes to return to Shareholders approximately £481 million ofthe cash realised from that flotation, representing a return of £3.00 for eachExisting Ordinary Share held by Shareholders on 23 March 2007. The remainder ofthe proceeds will currently be retained to fund the Group's business, therebyproviding financial flexibility to support the growth of Capricorn, with the aimof creating and realising further value for Shareholders in the future. This return of cash is proposed to be made in a manner that should providecertain Shareholders with an element of choice as to when and in what form theyreceive the cash. Return of Cash The Return of Cash is proposed to be made by means of a B Share structure, interms of which each Shareholder will receive: For each Existing Ordinary Share held on 23 March 2007 - 1 B Share For every 16 Existing Ordinary Shares held on 23 March 2007 - 13 New OrdinaryShares The B Shares will not be listed on the Official List or admitted to trading onthe London Stock Exchange. The New Ordinary Shares will be listed on the LondonStock Exchange and will replace the Existing Ordinary Shares. The choices which will be available to holders of B Shares in respect of theReturn of Cash, if approved by Shareholders at the EGM, are summarised below. The B Share Choices Under the Return of Cash, Shareholders will have the following three choices inrelation to the B Shares held by them on the B Share Record Date, althoughcertain Shareholders resident outside of the United Kingdom will only beentitled to receive the Single B Share Dividend (being Choice 1 below). Shareholders resident in the United Kingdom should read the Circular carefullyas it explains the United Kingdom tax consequences of the three choices undercurrent law. Any Shareholder who is in any doubt as to his tax position, or whois resident for tax purposes in a jurisdiction other than the United Kingdom,should consult an appropriate professional adviser without delay. Save as noted above, Shareholders may elect to receive any one of, or acombination of, the B Share Choices. Choice 1: Single B Share Dividend Shareholders can elect in respect of all or some of their B Shares, to receive asingle dividend of £3.00 per B Share. The dividend will become payable on 4April 2007, following which those B Shares which have been so elected will beautomatically converted into Deferred Shares with a negligible value. The Single B Share Dividend will be taxed as income, as more fully described inthe Circular. Choice 2: Initial Purchase Offer Shareholders can elect in respect of all or some of their B Shares, to havethose B Shares purchased by Hoare Govett on 4 April 2007 at £3.00 per B Share,free of all dealing expenses and commissions. Details of the terms of the offerto be made by Hoare Govett are set out in paragraphs 4 to 7 of Part III of theCircular. In particular, Shareholders should note that Hoare Govett may decidenot to make the offer if certain force majeure events were to occur. It is expected that the proceeds from this purchase should be treated as capitalfor United Kingdom tax purposes on the basis of current practice. Choice 3: Future Purchase Offer Shareholders, who elect for this choice in respect of all or some of their BShares, will retain those B Shares for the time being. It is likely thatShareholders will be given the opportunity to sell further B Shares to HoareGovett on 10 April 2007 at £3.00 per B Share, free of all dealing expenses andcommissions. If this is the case (and assuming there has been no change incurrent practice) the proceeds from this Future Purchase Offer should also betreated as capital for United Kingdom tax purposes. Share Capital Consolidation The aggregate amount proposed to be returned to Shareholders pursuant to theReturn of Cash is equivalent to approximately 18.75 per cent. of the marketcapitalisation of the Company at the close of business on 23 February 2007(being the latest practicable date before the publication of the Circular). The effect of the Share Capital Consolidation is that the Existing OrdinaryShares will be replaced by the New Ordinary Shares so as to reduce the number ofshares in issue to reflect the amount of cash to be returned to Shareholders.The aim of this is to seek to make the market price of a Cairn share comparablebefore and after the Return of Cash, subject to normal market movementsfollowing the date of the Circular. The ratio used for the Share Capital Consolidation has been set by reference tothe closing middle-market price of £16.00 per Existing Ordinary Share on 23February 2007. On that basis, the Share Capital Consolidation will result ineach Existing Ordinary Share being subdivided and consolidated into 0.8125 of aNew Ordinary Share. Fractional entitlements arising from the Share CapitalConsolidation will be aggregated and sold in the market on behalf of therelevant Shareholders. The proceeds of sale are expected to be sent toShareholders on 11 April 2007 (or, if less than £3.00 in the case of any oneShareholder, donated to charities chosen by the Board). The value of any oneShareholder's fractional entitlement will not exceed the value of one NewOrdinary Share. As all ordinary shareholdings in the Company will be consolidated, the number ofshares held by each Shareholder will reduce but Shareholders' percentageholdings in the issued ordinary share capital of the Company will (save inrespect of fractional entitlements) remain unchanged immediately following theShare Capital Consolidation. Similarly, although the nominal value of each Ordinary Share will change from 10pence to 6 2/13 pence, the New Ordinary Shares will be equivalent in allmaterial respects to the Existing Ordinary Shares, including their dividend,voting and other rights and will be admitted to trading in the same way as theExisting Ordinary Shares. Following the Share Capital Consolidation, the Company's authorised equity sharecapital will comprise 365,625,000 New Ordinary Shares and, assuming no furthershares are issued between 23 February 2007 and the date on which the ShareCapital Consolidation becomes effective; its issued equity share capital willcomprise 130,249,576 New Ordinary Shares. Circular The Circular to shareholders in connection with the Return of Cash will beposted to Shareholders today. The EGM seeking Shareholder approval for theseproposals will be held at 2.15 p.m. on 22 March 2007. The Circular will shortly be available to the public for inspection at the UKListing Authority's Document Viewing Facility, which is situated at: Financial Services Authority25 The North ColonnadeCanary WharfLondonE14 5HSTel No. +44 (0)20 7066 1000, during normal business hours on any weekday(Saturdays, Sundays and public holidays excepted). The Circular will also shortly be available on the Investor Relations section ofCairn's website at www.cairn-energy.plc.uk. Enquiries to: Analysts/Investors Tel: 0131 475 3000 Sir Bill Gammell, Chief Executive Jann Brown, Finance Director Media Tel: 0207 404 5959 Brunswick Group LLP: Patrick Handley, Mark Antelme, Phoebe Buckland Key dates A detailed timetable is set out in Part II of the Circular. The following arekey dates in respect of the Return of Cash: Latest time and date for receipt of Electronic Proxy Instruction, CREST, ProxyInstruction or Form of Proxy for EGM - 2.15 p.m. on 20 March 2007 EGM - 2.15 p.m. on 22 March 2007 Latest time and date for receipt of Election Forms and TTE Instructions fromCREST holders in relation to the B Share Alternatives and Election FormEffective Date - 11.00 a.m. on 3 April 2007 Despatch of cheques or bank accounts credited, as appropriate, in respect of theSingle B Share Dividend (Choice 1) - 11 April 2007 Despatch of cheques or CREST accounts credited, as appropriate, in respect ofthe B Shares purchased on the Initial Purchase Date (Choice 2) - 11 April 2007 These dates may, however, be subject to change. Definitions The following definitions apply throughout this announcement: "B Shares" - the unlisted limited voting preference shares of 5 pence each in thecapital of Cairn, the rights and restrictions of which are set out in theCircular; "B Share Choices" - the choices of the Single B Share Dividend, the InitialPurchase Offer and the retention of B Shares until any Future Purchase Offer (ifany) is made; "B Share Record Date" - 6.00 p.m. on 3 April 2007 (or such other time and/or dateas the board of directors of the Company may determine); "Cairn" - Cairn Energy PLC; "Cairn India" - Cairn India Limited; "Capricorn" - Capricorn Energy Limited and its subsidiaries; "Capital Reorganisation" - the reorganisation of Cairn's share capital comprising(i) the subdivision of each Existing Ordinary Share held by a holder on 23 March2007 at 6.00 p.m. into two intermediary unclassified shares and thereclassification of one in every two of those shares as one B Share in themanner set out in the special resolution in the notice convening the EGM set outat the end of the Circular and (ii) the Share Capital Consolidation; "Circular" - the circular to be sent to Shareholders dated 27 February 2007relating to the Return of Cash; "Deferred Shares" - the unlisted non-voting deferred shares of 5 pence each in thecapital of Cairn, the rights and restrictions of which are set out in theCircular; "EGM" - the extraordinary general meeting of Shareholders to be held at 2.15 p.m.on 22 March 2007 in connection with the Return of Cash, notice of which iscontained at the end of the Circular; "Existing Ordinary Shares" - issued ordinary shares of 10 pence each in thecapital of Cairn existing before the Capital Reorganisation; "Future Purchase Offer" - the offer expected to be made by Hoare Govett, acting asprincipal, to purchase B Shares retained by Shareholders following the InitialPurchase Offer; "Group" - Cairn and its subsidiary and associated undertakings; "Hoare Govett" - Hoare Govett Limited or, in connection with either the InitialPurchase Offer or (if one is made) any Future Purchase Offer, ABN AMRO BankN.V., London Branch represented by Hoare Govett Limited; "Initial Purchase Offer" - the initial offer by Hoare Govett, acting as principal,to purchase B Shares on 4 April 2007 (or such other date as the Directors maydetermine); "London Stock Exchange" - London Stock Exchange plc; "New Ordinary Shares" - following the Capital Reorganisation, the new ordinaryshares of 6 2/13 pence each in the capital of the Company admitted to theOfficial List and which will replace the Existing Ordinary Shares; "Official List" - the official list maintained by the UK Listing Authority for thepurposes of Part VI of the Financial Services and Markets Act 2000 (as amended); "Return of Cash" - the transaction comprising the Capital Reorganisation and the BShare Choices; "Shareholders" - holders of Existing Ordinary Shares, New Ordinary Shares and / orB Shares, as the context may require; "Share Capital Consolidation" - the subdivision and consolidation of the ExistingOrdinary Shares in the manner set out in the special resolution in the noticeconvening the EGM set out at the end of the Circular; "Single B Share Dividend" - the dividend of £3.00 per B Share; "UK or United Kingdom" - the United Kingdom of Great Britain and Northern Ireland;and "UK Listing Authority" - the Financial Services Authority acting in its capacityas a competent authority for the purposes of Part VI of the Financial Servicesand Markets Act 2000 (as amended). This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Capricorn Energy PLC