Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Cairn has won the arbitration on a 3 to zero vote. The insian government agreed that the arbitration was final during that process, they have subsequentalky changed the law that gave rise to the tax assessment. Total and absolute defeat after may years of bullying and non acceptance of facts, even their own supreme court found against them.
This is the one you go for if you have a brain!
After may years of pain why rush to a decision now?
I do not understand why we should panic now
India has changed their law and accepted that they are wrong. Judges read the news too.
They want to settle for a number of very important political reasons.
When politicians panic their countrys money has no importance - only their political needs
Now is the time to dig in and fight. If you do not fight this you will fight nothing.
The ‘they’ appear to be the indian government
They would like to close it now but they do not have the power to do so.
It is always the same in these situations. Specifically here
The indian government uses everything in its power to bully and damage cairn. In this case it is the indian government raiding cairn offices, seizing cairn assets, selling those assets and fighting everything in court down to the arbitrators actually having to make a decision and an award.
Cairn takes everything in its stride, goes to court and over many lonely years proves its case, takes the hit on the sale of its assets and acts at all times fairly and within the law.
Now the indian government wants to settle by wednesday
The bully always breaks - now is not the time to settle or panic
What is a quasi government guarantee worth from a government that refuses to pay an international arbitration award?
I wonder?
Would you invest billions in India after seeing how your investment in this oil company was treated.
Real life is a lot more complicated than this posting would appear to make it.
If i worked with Blackrock i would want these guys to understand that playing games with my investments will cost you dearly. More especially if you wanted me to invest billions.
Seems a good reason to claim damages. Should be a strong case.
The new legislation will not benefit them so hard to see why they will drop it.
Maybe the indian government will have to pay for their actions
Depending on location of entity borrowing and security detail it might be a risk management tool
Hard to argue the indian government is anxious to settle as you explain and indeed as their actions in passing the law so quickly would seem to confirm.
Why should Cairn rush to settle. Do we not need to wait and see how the legal actions go unless a very substantial offer is made greatly in excess of the sum guaranteed by the legislation?
Why worry.
All members of the arbitration panel found in Cairns favour. The indian government has admitted they are in the wrong by passing the recent law. Cairn has had many a hard and lonely day and indeed year as the indian government sold off its assets leaving them no choice other than to spend management time and money pursuing the legal route. Having done all that why panic now.
This is a fantastic position to be in. A zero or negative interest rate environment. A clock ticking with interest accruing. A political animal in panic (money does not see, to matter when they panic). Now is not the time to panic.
The legal cases are going through their natural and slow process. Why not wait and see what happens. The indian law is passed so the die is cast for them.
As a shareholder i would like if the next action went to a vote in say 3 months when we see how the wind is blowing.
Any chance?
It must be hard for Cairn managers to think about settling with a government that has grabbed and stolen their assets in contravention of that governments supreme court and the international board of arbitration which included one arbitrator appointed by them.
Never the less they must look at this coldly and commercially with an eye only to the shareholders. As the company has over half a billion dollars in cash there is no need to worry about the other stakeholders as they have nothing to gain or loose.
They have a number of options
1. Sell the debt. This is a very attractive course of action. If the buyer is an animal capable of being as nasty to the indian government as they have been to cairn it will greatly raise the temperature on the government. Picking the most aggressive purchaser as possible but perhaps putting a forward date on the deal may cause some politicians to think and act with some honour.
2. Sell part of the debt along the same lines as above. Works for the shareholders in that say USD 750 million received now with a chance of an additional sum in the future.
3. Agree a deal now. Hard to see how a country in the space race needs an instalment arrangement when it is merely returning what it has already stolen. This gives an immediate uplift to the shareholder.
4. Go for it. With USD 500 million in the bank this is not a problem. Personally i would love to be in this position at a time when banks are trying to charge to keep money with them and the indian government are on the hook for interest every day this goes on. By passing that law they have confirmed they are wrong and their case has no merit. If you were ever going to fight for your rights. Now is the time to do it. What easier way is there to make USD 700 MILLION. This will kick out the benefit to the shareholder and may mean the share drops back again. That could only be seen as a buy signal to those willing to wait. Not a big ask at a time of zero return on money.
interesting decision. Pretty obvious which way i would go