The Open Offer arises from the purchase by Burren on February 14, 2005 of Unocal Bharat Limited, which owns a 26% stake in HOEC, for a consideration of US$26 million, equating to Rupees 74.4 per share. The rules of the Securities & Exchange Board of India ('SEBI') obligate Burren to make an offer for not less than 20% of the outstanding shares at or above a specified minimum price. The Open Offer price equates to this minimum price. The market price of HOEC shares recently has been in excess of Rupees 180 per share.
The delay to the Open Offer, which was originally intended to open in April, is as a consequence of SEBI considering the impact of legal actions bought by Hardy Oil & Gas Ltd. in the Indian courts alleging certain rights under a shareholders agreement.
Alongside the original purchase of the 26% interest in HOEC Burren entered into agreements with two major shareholders of HOEC to conditionally acquire, subject inter alia to the completion of the Open Offer, shares amounting to a maximum additional 15% of HOEC at prices per share similar to that paid for the 26% stake. One of these conditional agreements, for up to 10.7% of the outstanding shares, may lapse before the completion of the Open Offer. Burren's 26% stake is valued at US$62 million based on an HOEC share price of Rupees 180, more than double the price paid for it in February.
Burren remains committed to its investment in HOEC and to contributing funds to the company in due course to fund its development projects, primarily the PY-1 gas field in the offshore Cauvery Basin in south-east India. Burren continues to have two representatives on HOEC's Board.
Finian O'Sullivan, Chief Executive of Burren, said:
'Our investment in HOEC provides a good opportunity for Burren to participate in the Indian oil & gas industry by working with a leading domestic oil and gas company. HOEC already has solid production and there is additional exploration and development upside which we believe will help to meet the demands of the country's growing energy requirements.'
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