- Oops!Something went wrong.Please try again later.
By Pushkala Aripaka
(Reuters) - Britain's Cairn Energy pledged to return up to $700 million to shareholders through a special dividend and a share buyback this year, as it signalled a long-running billion dollar tax dispute with India may be nearing an end.
Oil and gas producer Cairn, which has major operations in the South Asian country, said on Tuesday it was considering entering into statutory undertakings with the government after changes to a retrospective tax law at the heart of the row.
Last month, India proposed scrapping the 2012 law and said it would refund companies. Cairn was awarded damages of over $1.2 billion last year in a Dutch court ruling which was challenged by New Delhi.
"The Indian government is very focused on resolving this as quickly as possible and they're targeting completion within the next few weeks," Cairn Chief Executive Simon Thomson said.
London-listed Cairn has been pursuing options to seize Indian assets overseas, including those of national carrier Air India, in the absence of a settlement. A resolution would see it drop these cases as well.
"When we say shortly, we anticipate the near term resolution of this issue - that means all of our litigation, and the Indian government paying us the $1.06 billion," Cairn's Thomson added on a conference call, referring to the expected refund.
That amount is just short of Cairn's $1.35 billion market capitalisation value, and $500 million would be paid out as a special dividend, with $200 million earmarked for the buyback.
"This move implies that the recent developments in India have reached a point where (Cairn) is confident of recovering funds and putting the case behind it," JPMorgan analysts said.
Shares in Cairn, which initially rose as much as 8.2%, were trading 2.3% higher at 199.5 pence at 0857 GMT.
Cairn also posted a smaller operating loss in the first-half and narrowed its 2021 outlook for production from its British assets to a range of 17,000 to 19,000 barrels per day.
(Reporting by Pushkala Aripaka in Bengaluru; editing by Uttaresh.V and Alexander Smith)