Cairn Energy plc has suspended USD 300 Million share buyback.
Cairn Energy plc is a Scottish company (British Oil and Gas company)
who has specialization in exploring Oil and Gas.
Cairn Energy suspended this buyback as it is unable to sell
remaning 10% Stake in Cairn India due to tax dispute with Indian Government.
They had planned to
buy-back shares in last October.
They will doing the same from March 21, 2014 but same is
suspended.
Cairn India sold 58.5% of its Share to Anil Aggarwal Promoted
Vedanta Group in 2011 for USD 8.67 Billion. But they had still 10.3% stake
which is valued at around USD 1 billion.
The Cairn Energy stock tumbled
13.08% to 170.79 pence on the London Stock Exchange after the
announcement on Monday.
Tax Dispute
In year 2006 Cairn India launched IPO and raised Rs 8,616 crore.
In year 2006 Cairn India launched IPO and raised Rs 8,616 crore.
They will face a Tax demand
of Rs. 24,500 crore for capital gain it made when Cairn Energy plc transferred all
Indian assets to new company in 2006 named as Cairn India.
In a January 22 income tax department has sent a notice to Cairn Energy and asking them to provide information related to transaction between Oct and Dec 2006 when Cairn India buys shares of worth 26,681 crore from Cairn India Holding ltd basesd in Jersery. Jersey is a Tax heaven. They bought 251.22 million shares from Cairn India Holding ltd.
This all happens due to amendments made
in tax law by finance minister in 2012.
I-T Department has so far not raised a tax demand on Cairn Energy.
I-T Department has so far not raised a tax demand on Cairn Energy.
IT Department has only ordered Cairn India not to allow the
transfer of UK firm's residual stake.
They
also ordered that the shares cannot be pledged or mortgaged. Moreover In 2006 exceptional gain of Pound 1.361 billion is admitted by Cairn UK Holdings Ltd in its financial statement
They said that they had gained the same by the sale of Cairn India Holdings Ltd to Cairn India.