SHARES in Cairn Energy took a hit yesterday as the FTSE 250 oil and gas explorer announced it had suspended its share buy-back programme while it deals with an Indian tax dispute.
The Edinburgh-based company reported a pre-tax loss of $1.1bn (£660m) and revealed that it would be halting its $300m share buy-back programme while an investigation by the Indian tax authorities into its operations takes place.
The Indian tax regulator had contacted Cairn in January for information about a group reorganisation that took place in 2006. According to Cairn, which denies any wrongdoing, the reorganisation was compliant with tax legislation in place at the time in each relevant jurisdiction, including India.
“The correspondence indicates that the request for information is in respect of amendments introduced in the 2012 Indian Finance Act which seek to tax prior year transactions under legislation applied retrospectively,” Cairn said.
While the interactions with the Indian Income Tax Department continue, Cairn has been restricted from selling its shares in Cairn India (valued at $1bn as at 31 December 2013).
Cairn shares closed 14% down. For more share price information visit the Share Price Centre.