Cairn halts buybacks over Indian tax dispute
British oil and gas explorer Cairn Energy has suspended share buy-backs until an Indian tax dispute is resolved, it said Tuesday, adding it sank into the red last year.
Edinburgh-based Cairn said it received a request in January from the Indian tax authorities to provide information relating to its 2006/2007 financial year, following a retrospective change in taxation laws in 2012.
While the probe continues, Cairn added that it has been restricted from selling its remaining Cairn India Limited (CIL) stake, which totals about ten percent.
"The board has decided to suspend the previously announced share buy-back programme as of 21 March 2014 until the position regarding the CIL shareholding is resolved," it said.
The company said it had complied with tax legislation at all times and would take necessary steps to protect its interests.
Back in October, Cairn Energy announced plans to return up to $300 million to shareholders via a share repurchase program. It has so far bought back 25.18 million shares for $94.7 million.
The group meanwhile sank into a net loss of $556 million (400 million euros) last year, after taking a hit from unsuccessful drilling in Morocco and the North Sea, it added on Tuesday. That compared with profit after tax of $73 million in 2012.
In late 2011, Cairn agreed to sell a 40-percent controlling stake in CIL to India-focused Vedanta Resources for $6.5 billion, after a long battle to win Indian government approval for the sale. It retained a 22-percent stake but has since sold down the holding.
© 2014 AFP