Following a book building exercise, based on an offering document (the "Red Herring Prospectus"), Cairn has agreed and Cairn India has set an offer price for the flotation of Rs 160 per Cairn India share. This implies a Cairn India market capitalization (including approximately US $600 million of the gross proceeds to be retained by Cairn India) of approximately Rs 282.45 billion (or approximately US $6.32 billion*) excluding any exercise of the over-allotment option.
The flotation will involve the issue of approximately 538.47 million Cairn India shares, excluding any exercise of the over-allotment option, comprising approximately 209.67 million shares priced at Rs 160 per share pursuant to the pre-flotation placement, and approximately 328.80 million shares priced at Rs 160 per share pursuant to the offer to the public (excluding any exercise of the over-allotment option). Following the flotation, Cairn will own a 69.5% holding in Cairn India (excluding any exercise of the over-allotment option).
Based on the price above, gross proceeds of the flotation (excluding any exercise of the over-allotment option) would be Rs 86.16 billion (US $1.93 billion*). After taking into account the proportion of the gross proceeds to be retained by Cairn India, expected to be approximately Rs 26.81 billion (US $600 million*), the gross proceeds expected to be received by Cairn (excluding any exercise of the over-allotment option) would be approximately Rs 59.35 billion (US $1.33 billion*).
A final offering document is expected to be published on December 19, 2006. Allotment of Cairn India shares is expected to take place on December 29, 2006 with trading of Cairn India shares expected to commence in early January 2007. Further announcements relating to the Prospectus, allotment and commencement of trading of Cairn India shares will be made in due course.
ABN AMRO Rothschild and Merrill Lynch are acting as joint global coordinators and bookrunners and Morgan Stanley as bookrunner in relation to the flotation.
*Based on a US dollar to Rupee exchange rate of 1:44.686 (source: Financial Times closing mid rate of exchange on December 15, 2006).
Sir Bill Gammell, Chief Executive of Cairn Energy PLC, said:
"I am delighted that Cairn has achieved this important milestone in the flotation of our Indian business. This has been one of the biggest IPOs carried out in the Indian markets and is a natural evolution for Cairn, building on more than ten years of success in South Asia.
On completion of this transaction, Cairn India will be the largest independent exploration and production company listed in India. With an estimated near five-fold increase in production by the end of the decade combined with near term potential in Rajasthan, Cairn India is poised to play an integral part in meeting India's growing energy demand.
I firmly believe that, through the IPO, we have created a world-class business which is ideally positioned to benefit from India's rapid economic growth."
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