Edinburgh-based international oil and gas company Cairn Energy is ending its long-running tax fight with the government of India and is promising shareholders a payout of up to $700 million by early 2022.
Cairn Energy also said it will change its name to Capricorn Energy from December 13, 2021.
Cairn Energy, which is set to receive about $1.06 billion in the settlement, said on Wednesday it has entered negotiations with the Indian government as it moves “toward expediting the refund.”
In a stock exchange statement, Cairn Energy said: “Cairn is pleased to announce that it has entered into undertakings with the Government of India in order to participate in the scheme introduced by recent Indian legislation, the Taxation Laws (Amendment) Bill 2021 (the ‘Taxation Amendment Act’), allowing the refund of taxes previously collected from Cairn in India.
“Subject to certain conditions, the Taxation Amendment Act nullifies the tax assessment originally levied against Cairn in January 2016 and orders the refund of INR 79bn (approximately US$1.06bn) which was collected from Cairn in respect of that assessment.
“In order to satisfy those conditions, Cairn will commence the filing of the necessary documentation under rule 11UF(3) of the Indian Income Tax Rules 1962(Rules) intimating the withdrawal, termination and/or discontinuance of various enforcement actions.
“Cairn is working collaboratively with the Government of India towards expediting the refund within the process of the Tax Amendment Act Rules.
“The previously announced special dividend is expected to be paid by early 2022.”
On September 7, Cairn Energy pledged to return up to $700 million to shareholders through a special dividend and a share buyback when it suggested that the long-running billion dollar tax dispute with India may be nearing an end.
On the name change, Cairn said on Wednesday: “Cairn plans to change its company name from Cairn Energy PLC to Capricorn Energy PLC, effective from 13 December 2021.
“The LSE stock ticker will remain as CNE.
“This follows an agreement at the time of the Cairn India IPO that the name would ultimately be changed.
“Given the recent legislative change in India and our participation in the related tax refund process, we are now putting in place the planned name change.
“The new name reflects continuity and evolution: the majority of Cairn’s subsidiaries have been known as Capricorn for some time.
“It is an established and respected name across our global operations, maintaining stakeholder confidence in our long-standing reputation for responsibility, relationships and respect.
“No action from shareholders is required in relation to the change.”