MUMBAI: Cairn India Chief Executive Mayank Ashar said on Tuesday the firm's proposed buyout by parent Vedanta Ltd was "on track", brushing off demands from some minority shareholders for a higher price tag.
Under the $2.3 billion deal to buy out minorities in Cairn India, shareholders in the country's largest private sector crude oil producer will get one share in Vedanta and one redeemable preference share.
Speaking to reporters after attending his first annual shareholder meeting, Ashar, who joined Cairn India in November, said the company had received a "variety of perspectives" on the deal, a majority of which were positive.
He dismissed concerns that opposing investors could derail the deal -- fears that sent Cairn India shares down 3 percent on Tuesday, touching their lowest level in more than six years at one point.
"At the end of the day, the shareholders will make up their mind. What I saw was fairly positive reaction to the merger," Ashar said, when asked about shareholder concerns on the deal.
The buyout by Vedanta, controlled by billionaire Anil Agarwal, is being seen by many as a test for India's new shareholder protection law. Under the new provision, more than half of Cairn India's minority shareholders must vote in favour of the deal for it to go through.
That means the fate of the deal could be sealed by its largest minority shareholders, including former parent Cairn Energy Plc and state insurer Life Insurance Corp (LIC), which together own close to 19 percent of Cairn India.
An official at LIC told Reuters this week the firm had reservations about the deal, and had raised them with Cairn India management.
Shareholders have complained about the price and the timing of the deal: they say Vedanta is taking advantage of a sharp fall in Cairn India's share price. Some shareholders at the meeting on Tuesday said they also did not want debt-laden Vedanta to have unfettered access to Cairn's cash.
"The majority shareholders may be same, but as far as minority shareholders are concerned, this is our company," said an official at a fund manager which is a minority shareholder in Cairn, with a stake of around 1 percent.
"Why should these cash reserves go to another company?"
Mumbai-listed Vedanta, operating unit of London-listed mining giant Vedanta Resources Plc, owns a 59.88 percent stake in Cairn India.