The government on Monday stated it has received ‘multiple’ expressions of interests (EoIs) for its whole stake in Air India (AI), whilst sources stated US-primarily based NRI firm Interups Inc and at least one particular AI employee group are amongst the entities, which have placed the preliminary bids for the ailing national carrier.
Tata Group by means of its aviation firm AirAsia India is also stated to have submitted EoI, but there was no official word on this till late Monday. The final date for submission of EoI was December 14.
Speaking to FE, Air India’s industrial director Meenakshi Malik stated a group 219 personnel “from office assistant to AI Board member” have submitted an EoI for 51% stake in the national carrier whilst the remaining stake will be held by “a financial partner”.
Interups chairman Laxmi Prasad confirmed to FE that the firm has bid with an employee group but stated this was not the one particular referred to by Malik, which means more than one particular employee panels may possibly be in the fray. “We are extending substantial stake to the employees with no investment contribution from them.
We have plans to split AI assets into operational company and an InvIT so as to monetise some infrastructure-related assets (air routes, ground handling and parking, training and maintenance),” Prasad stated. “Employees will have a share of 51% and they will run the scheduled airline operations while we provide strategic initiatives,” he stated, detailing the program.
Prasad also added Interups’ “offer is open to all employees of Air India”. Interups, a listed business, carries 27,000 plus NRI retirement asset accounts. It had earlier stated it was “dead serious” in purchasing an AI stake.
“The transaction will now move to the second stage (short-listing and financial bids),” division of investment and public asset management (Dipam) secretary Tuhin Kanta Pandey tweeted on Monday.
On January 27, the government invited EoI for proposed strategic disinvestment of AI by way of management manage and sale of one hundred% stake which will incorporate AI’s one hundred% stake in Air India Express and 50% in Air India SATS Airport Services.
On October 29, addressing the issues expressed by prospective purchasers amid fresh uncertainties brought on by Covid-19, the Centre had changed bidding norms for privatization of AI by permitting bids on the basis of the airline’s enterprise worth (EV). The purchaser will not will need to accept any pre-determined level of debt, but will call for to spend 15% of EV quoted by it in money.
Under the earlier program, the purchaser was expected to take more than the airline’s estimated residual debt of Rs 23,286 crore (from the total about Rs 60,000 crore debt as on March 31, 2019).
Bidders can even spend one hundred% in money to the government. A larger money payment by the purchaser will bolster the government disinvestment receipts in FY21, but boost its burden from taking more than of complete or component of the AI debt.
The enterprise worth to be quoted (marketplace worth of debt and equity) will comprise at least 15% in money payment to the government and debt takeover by the bidders equivalent to 85% of the worth quoted, aviation minister Hardeep Singh Puri had stated.
As transaction adviser, EY had earlier, amongst other choices, recommended that the debt level be brought down to Rs 17,464 crore, with no extra modifications in bidding construct. It had cited the prevailing scenario in the domestic and international aviation market and worsening of AI’s overall performance.
With Covid-19 hitting the aviation sector challenging, Air India has estimated that its money losses would rise 80% on year to Rs 6,000 crore in FY21. Air India CMD Rajiv Bansal had stated that the carrier’s losses could be about Rs 8,000 crore in FY21.