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- Tender floated to sell 76% stake in Air India in 2018
- In 2020, the government decided to sell its entire share.
Financial bids for state-run airline Air India can be received till September 15. This bid can be received from Qualified Interested Bidders (QIBs). This information was given by Minister of State for Civil Aviation VK Singh.
EoI was issued on 27 January 2020
The Central Government had released the Expression of Interest (EoI) for Air India on 27 January 2020. Its submission date was extended several times due to Corona. Last time its submission date was kept on 14th December 2020. The government said that a lot of EoIs have been received from the transaction advisor. VK Singh said that the request for proposal along with the draft share purchase agreement has been shared with the QIB. This was shared by Transaction Advisor on 30 March 2021.
In a written reply in Lok Sabha, V.K. Singh said that the financial bids are expected to be received by September 15. However, the name of any QIB was not disclosed.
There is a debt of 60 thousand 74 crores
Air India had a total debt of Rs 60 thousand 74 crore as of 31 March 2019. Whoever buys Air India will also have to take a loan of Rs 23,286.5 crore out of it. The rest of the loan will be transferred to Air India Asset Holding through a special purpose vehicle. This condition has been imposed in the EoI issued in January 2020.
The loan will be repaid with the money of non-core assets
The minister said that the money that will come from Air India’s non-core assets will be used to repay Air India’s debt. Air India is preparing to sell all these properties. The reserve price of Air India’s property is fixed by its oversight committee. It has received proposals from three valuers.
16 property prices to be reduced
The Oversight Committee has approved a 10% reduction in reserve prices of 16 properties. Because many times these properties were auctioned, but due to the high price, no buyer came forward for it. In October 2020, the government had said that Air India would be sold at its enterprise value and not at its equity value. Enterprise value refers to the value of equity, debt and cash with the company. Equity value only takes into account the value of the company’s shares.
15% share will have to be given cash with the government
The central government had said in October 2020 that at least 15% of the enterprise value bidder will have to pay cash with the government. The rest will have to be taken as a loan with Air India. There was an attempt to sell Air India in 2018 also, but even then the government failed in it. After this, it was planned to sell 100% of its share in January 2020. In this Air India’s 100% stake in Air India Express was also kept. Whereas SATS was issued for sale of 50% stake in Airport Services.
In 2018, the government floated a tender to sell 76% of Air India’s stake. Also, it was decided to transfer its management control. However, till May 31, 2018, the government had not received any proposal on this. At that time, the last date for this was fixed on May 31.