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The government has substantially improved Air India’s sales conditions. It has offered for sale its 100% stake in AI and AI Express, instead of 76% on the first try, and the full 50% it owns in the AI-SATS ground handling joint venture.
- News18.com
- Last update: December 14, 2020 11:46 AM IST
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Rounak Kumar Gunjan
Tata Sons is ready to submit the Expression of Interest (EoI) for Air India’s strategic divestment process, sources told CNBC-TV18.
The development occurs when the deadline to submit the EoI ends today. Sources said that at the moment the Tatas are exploring various options on how to carry out this transaction, as the group already has two airlines in India: one, a joint venture with Singapore Airline, which is a full-service airline, and the other. being the joint venture with Air Asia.
“We’ve already seen Tony Fernandes come out of the closet and say that the relationship is under review and that all options have been considered. We are also hinted that perhaps Tata could consider purchasing Tony Fernandes from the Air Asia joint venture and this could be used as a vehicle to board Air India because there is a non-compete clause for a full service carrier operation with Tata- Company. joint Singapore Airline, “reported CNBC-TV18.
This time, the government has substantially improved the conditions of sale of the AI. It has offered for sale its 100% stake in AI and AI Express, instead of 76% on the first try, and the full 50% it owns in the AI-SATS ground handling joint venture. Additionally, potential buyers will now bid on the basis of business value (EV).
This means that instead of having to take on a predetermined level of airline debt of Rs 23 billion, they will now price an EV based on their estimate of AI’s combined equity and debt value. The winning bidders will decide who is trading the highest EV value and at least 15% of this value must be paid in cash, while the remainder can be assumed as debt.
The bidders had requested clarification from the Department of Investment and Management of Public Assets (DIPAM) on the changes. One of them, citing huge cash requirements for things like the AI fleet upgrade and the VRS scheme, suggested that the government sell AI without asking for any cash payments up front.
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