Only bids from those investors, who haveclearance, will be opened.
The government has started inviting financial bids for state-run Air India (AI), movingto the national carrier’s privatization, which is expected to be completed by September. The government is in AI, which has been bleeding since its amalgamation with Indian Airlines in 2007. Tata Group was reportedly among the “multiple” suitorswithd preliminary bids for the loss-making airline in December 2020.
The Centre has now issued a request for proposal (RFP) to the shortlisted bidders, asking them to. These are expected to be filed in a couple of months. Sources said the bidders would have to get ministry, which may take another month.
Only bids from those investors, who have received security clearance, will be opened. August-September may conclude the transaction once the winning bidder obtains all regulatory approvals.
Meanwhile, the Department of Investment and public asset management (Dipam) has given the shortlisted firmsroom and the actual share purchase agreement (SPA) for a better understanding of the asset and liabilities of the airline.
Having failed to attract substantial interest since 2017, the Centre has sweetened the AI deal by giving potential suitors the flexibility tohow much of the airline’s debt they would like to take on as part of the deal.
Earlier, the buyer was required to take over as much as `23,286 crores of AI’s total debt of over `60,000 crores (as of March 31, 2019); the government was supposed to absorb the rest.
Moreover, on October 29 last year,by potential buyers amid fresh Covid-induced uncertainties, the Centre changed norms by allowing bids based on the airline’s enterprise value (market value of debt and equity). The buyer won’t need to accept any pre-determined level of 15% of the enterprise value quoted by it in cash.
With the sweetening of the deal, senior government officials are optimistic about the AI deal going through this. The . With , Air India has estimated that its cash losses would rise 80% on year to `6,000 crores in FY21. Air India CMD Rajiv Bansal had said that the carrier’s losses could be around `8,000 crores in FY21.
On January 27, 2020, the government invited EoI for the proposed strategic disinvestment of AI by management control and sale of a 100% stake, including AI’s 100% stake in AirServices.