Air India’s privatization could spill over into the next financial year as the divestiture process is unlikely to be completed in just over three months of 2020-21, an official said. Salt-software conglomerate Tata Group and US fund Interups Inc were among “multiple” entities that launched preliminary offers last week to buy loss-making carrier Air India. A group of over 200 Air India employees also submitted an Expression of Interest (EOI) for the carrier in partnership with Interups by the end of the December 14 deadline.
“The Transaction Advisor will notify qualified bidders by January 6, after which bidders will be granted access to Air India’s Virtual Data Room (VDR),” an official said. The share purchase agreement will be shared with the bidders, after which financial offers will be solicited, the official added. “The transaction will only close in the next fiscal year, as we expect bidders to have many questions once they gain access to the VDR and before submitting their financial bids,” the official told PTI. The government is selling its entire 100% stake in Air India, which has suffered losses since its 2007 merger with national operator Indian Airlines.
The stake sale process has been delayed due to the COVID-19 pandemic and the government has extended the deadline for submitting preliminary bids for the national carrier by five times. The airline, which started as a postman in 1932, will give the winning bidder control of 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots at foreign airports.
In addition, the bidder would also get 100% of the Air India Express low-cost arm and 50% of AISATS, which provides cargo and ground handling services at major Indian airports. With previous attempts since 2017 failing to garner significant interest, the government this time sweetened the deal by giving potential suitors freedom to decide how much airline debt they want to take on in the deal. framework of the transaction. Previously, bidders had to take over the entire debt of Rs 60,074 crore.
The Secretary of the Department of Investment and Public Assets Management (DIPAM), Tuhin Kanta Pandey, earlier said that potential Air India investors had made comments that due to the uncertainty created by COVID-19 in the aviation sector, debt should not be fixed at the expression of interest. (EoI).
Therefore, at the end of October, the government decided to launch a bid for Air India based on enterprise value, which includes a company’s market capitalization, short and long-term debt as well as cash on on the company’s balance sheet. In the current financial year, the government has set a record Rs 2.10 lakh crore divestment target. The target includes Rs 1.20 lakh crore from the sale of shares in Central Public Sector Enterprises (CPSEs) and Rs 90,000 crore from a sale of shares in public sector banks and financial institutions , including the listing of insurance giant LIC.
So far this financial year, Rs 11,006 crore has been mopped up through the sale of a minority stake in CPSE. After its unsuccessful bid to sell the loss-making carrier in 2018, the government in January 2020 relaunched the divestment process and launched tenders for the sale of 100% of its stake in the state-owned airline, including the stake of 100% Air India in AI. Express and 50% in Air India SATS Airport Services (AISATS)
In 2018, the government offered to sell its 76% stake in the airline