Poor response may change Air India sale terms
In the event of a material change in terms of Air India’s sale after the deadline for submission of initial bids, those who have not thrown their hat into the ring before the original deadline, will get a fresh chance, an official said.business Updated: Apr 13, 2018 11:40 IST
The government is open to changing some of the restrictive conditions laid out in the terms of sale for Air India if it finds investor interest in the asset is lukewarm after the May 14 deadline for submission of initial bids. Prior to that, there will be no change to the terms of sale based on claims by companies opting out of the race for the national carrier, according to a government official, who spoke on condition of anonymity.
Also, in the event of a material change in conditions, those who have not thrown their hat into the ring before the original deadline, will get a fresh chance, the official said. The idea of going purely by the actual bids received rather than the posturing by potential investors is to make sure the disinvestment in Air India is truly a market driven process.
Despite Jet Airways (India) Ltd stating it is not participating in the transaction and InterGlobe Aviation Ltd, the operator of IndiGo airline, saying it has no capability to successfully turning around Air India, the government believes the offer will generate sufficient interest eventually.
“Mostly, investors keep their cards close to themselves till the 11th hour. It is in the last one hour before the deadline expires, they express their interest in any invitation for bids. We will wait and see how many investors show interest. It is not just airlines that can bid for Air India, businesses in other sectors are also free to bid,” said the official.
Changes required in the terms, if any, will be put together by the transaction adviser EY based on suggestions received and a decision will be taken by a group of ministers chaired by finance minister Arun Jaitley, said the official. The conditions in the information memorandum released by the civil aviation ministry include a three-year lock in period for investment and retaining AI brand for its operations for a number of years to be specified and compulsory listing of the firm. The government is expected to specify the terms relating to protecting employees post the deal in the request for proposals. It also intends to choose qualified bidders for 76% stake in AI, 100% stake in Air India Express Ltd and 50% stake in Air India SATS Airport Services Pvt. Ltd. based on networth and profitability cri- teria by May 28.
First Published: Apr 13, 2018 11:37 IST