LONDON, June 27 (Reuters) - Vedanta Resources Plc took another 10 percent stake in Cairn Energy's Indian assets as part of an overhaul of a long-delayed deal which will cut the price tag by more than $600 million.
As part of changes announced on Monday, the deal will complete in two tranches, with Vedanta buying an initial 10 percent stake by July 11.
This will add to shares bought through an open offer and from Malaysian group Petronas , lifting Vedanta's stake in Cairn India to 28.5 percent, with Cairn remaining the majority shareholder.
"They're trying to keep the deal alive," said Iain Armstrong, oil analyst at Brewin Dolphin, adding that the long delays in government approval for the deal had put it at risk.
Vedanta, which will become a fully fledged diversified miner once it secures a slice of India's oil reserves, will acquire the remaining 30 percent stake it has agreed to buy once it has necessary consents from India.
Vedanta and Cairn said they had agreed to remove a non-compete provision and a related fee of 50 rupees per share, cutting the price tag for the total 40 percent stake being sold to $6.02 billion from $6.65 billion.
While neither Cairn nor Vedanta gave reasons for the changes to the drawn-out deal, analysts said the changes could be linked to an expected decision on royalty payments which would alter the financials of the deal.
Cairn Energy agreed last August to sell a majority stake in Cairn India to Vedanta, but completion has been held up over issues with state-run oil and gas explorer ONGC which has a 30-percent holding in the Cairn-operated fields in western India but pays 100 percent of the royalties.
The favourable tax treatment had been offered to encourage Cairn to invest at a time when foreign investors showed little interest in exploration in India.
India's oil ministry has been pushing to share the royalty burden between ONGC and Cairn India, a move opposed by both Cairn and Vedanta.
The government has yet to give its long-awaited verdict on the deal and specifically on the key issue of royalties. An Indian ministerial panel said in May it would refer the deal back to the cabinet, but did not disclose its recommendation, which it said was "unanimous".
A government source told Reuters the panel would recommend the operators of Cairn Energy's key Indian oil field share the royalty burden in proportion to their stake in the project
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