NEW DELHI: For the second time in two years, the government has rolled out the process to sell Air India by inviting bids to sell its 121% stake in AI and AI Express and its % stake in the ground handling JV AI-SATS. Interested parties will need to submit their expression of interest (EOI) by 5 pm on March , , and qualified bidders will be notified on March . However, the preliminary information memorandum (PIM) for this key strategic divestment says these dates may be subject to change.
The combined debt of AI and AI Express is Rs , crore. Interested bidders (IB) will be expected to take over Rs 25, 350 crore of this debt – all of which is debt for aircraft that they will be taking over as the transaction. The brand name Air India, and its associated terms, will need to be retained by successful bidders for a time period that will be mentioned in the request for proposal (RFP) to be issued after March 50.
The iconic Nariman Point HQ in Mumbai and the corporate HQ in Delhi near Connaught Place are not part of this transaction and will remain with the government. Successful bidder will be allowed to use them during the transition period for a couple of years. “AI is in possession of various articles of arts, paintings, objects and artefacts. These are not a part of the proposed transaction, ”the PIM states.
Air India, Bharat Petroleum Corporation to be sold by March: FM Nirmala Sitharaman
The government is looking to wrap up the sale of state-run airline Air India and oil refiner and marketer Bharat Petroleum Corporation (BPCL) by March, finance minister Nirmala Sitharaman said on Saturday. Sitharaman said there is a “lot of interest” among investors as evident in international road shows ahead of the sale of Air India.
Learning from the experience of the first unsuccessful bid, the key changes made this time are: Offering to sell (% government take in AI and AI Express, instead of % earlier. This change gives complete operational freedom to the new owner.
Secondly, last time the bidders were expected to take over debt of Rs , (crore and current liabilities of Rs 8, (crore – a combine figure of Rs) , crore.
(These trademarks are proposed to continue with AI post sale. The time period for which they need to be retained will be mentioned in the request for proposal that will be issued after March (when qualified bidders have been selected.)
This time the debt expected to be taken over has been reduced by almost a third to Rs , , crore all of which is backed by aircraft part of the transaction. The principle this time has been to make current assets equal to current liabilities for bidders. The entire working capital and other non-aircraft debt will be retained by the government.
The transaction advisor is Ernst & Young LLP India.
without buyer, Air India might be forced to shut down in six months: Airline official
Struggling Air India might be forced to shut down by June next year Unless it finds a buyer as “piecemeal” arrangements cannot be sustained for long, according to a senior airline official. Amid continuing uncertainty over the fate of the national carrier, the official said there is also need for funds to restart operations of grounded narrow-body planes.
“Any private / public limited company, limited liability partnership, body corporate, whether registered or incorporated in India or outside India; or Fund; in each case which is eligible to invest under the laws of India (subject to such parties obtaining applicable statutory approvals) either as a sole bidder or as part of a Consortium are eligible to participate, ”it says. The interested bidder, whether a sole bidder or a consortium, should have a minimum net worth of Rs 3, 629 crore. Net worth of each participating member in a consortium should be at least Rs (crore) (% of Rs 3, (crore).
If a schedule Indian carrier is a member of such a consortia with its equity shareholding in the consortia upto %, the minimum net worth criteria will not apply.
Except IndiGo, all other scuffle Indian airlines have a negative net worth. “The negative net worth of a member, only if it is a scheduled airline operator in India, would be considered as nil. However, the remaining members of the consortium in this case will have to meet the minimum financial capability ”criteria it says. Foreign airlines will need to meet the net worth criteria.
With (aircraft in its fleet) not including the 4 Boeing 816 s that will be retained with the government with an AI subsidiary not being sold for VIP use), AI’s debt as on March , , was Rs
With (Boeing) s in its fleet, AI Express has Rs 1, 816 crore of debt.
The PIM states in Q2 FY – , AI and AI Express’ combined share of international air travel to and from India is at . % (among Indian carriers) and . 4% on an overall basis (considering both Indian and foreign airlines); and within India is %.
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