Updated: December 14, 2020 8:57:57 pm
This is the government’s second attempt to divest its stake in Air India. (Source: Air India / Twitter)
The Center has said it has received “multiple expressions of interest” from Air India, including an offer from Tata Sons and one from a consortium of airline employees and US-based investment firm Interups Inc.
The deadline for submitting formal offers closed at 5 pm on Monday (December 14). The government is likely to notify qualified bidders on January 5.
Second try
This is the government’s second attempt to divest its stake in Air India. The previous attempt in 2018 ended badly, after not a single offer was received for the debt-laden airline. 📣 Follow Express explained on Telegram
On the previous occasion, the government had put up for sale a 76% stake along with a part of its debt.
This time, it plans to divest 100% of its share capital in Air India Limited, which includes Air India’s equity stake of 100% in Air India Express and 50% in Air India SATS Airport Services.
Possible suitors
A source with knowledge of the matter said that the Tata Group has submitted an official expression of interest for the airline. The offer has not been made through one of its affiliated airlines, Vistara or AirAsia India, the source said.
A Tata Group spokesperson declined to comment.
The other confirmed offer has been made jointly by a consortium of Air India and Interups employees, the investment firm’s chairman Laxmi Prasad told The Indian Express.
The offer proposes to give a 51% stake to Air India’s employee association, which includes 219 employees, including some board members, and a 49% stake to Interups Inc, which will act as financial partner.
“Multiple expressions of interest have been received in Air India’s strategic divestiture. The transaction will now move to the second stage, ”said the secretary of the Department of Investment and Management of Public Assets, Tuhin Kanta Pandey, in a tweet.
The plan to involve airline employees was put in place by Air India’s commercial director, Meenakshi Mallik, who wrote to nearly 20,000 airline staff members requesting to participate in the divestment process. However, some employee unions had advised their members not to participate.
The way to follow
During this attempt, the most significant change made by the government to the terms of the tender was that it allowed potential investors to bid based on the value of the company, effectively allowing bidders to determine the level of debt they would like to assume .
Air India had current obligations and provisions, including short-term loans and commercial accounts payable of Rs 70,686.6 crore and net debt of Rs 58,255 crore at the end of 2018-19. The government has since transferred Rs 29,464 crore of this Air India debt to a government-owned special purpose vehicle, Air India Assets Holding Company Ltd.
In the future, entities that have submitted expressions of interest must submit physical bids before December 29, and qualified interested bidders will be informed on January 5.
These qualified bidders will submit their bids on the basis of business value, and the winning entity will be decided based on who is listing the highest business value. This entity will have to pay at least 15 percent of the value of the listed company in cash, while the rest can be contracted as debt.
© The Indian Express (P) Ltd
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