With no takers, Air India’s divestment plan nosedives

Sarkaritel
By Sarkaritel May 31, 2018 20:58


New Delhi, May 31  The central government’s plan to divest a majority stake in the national passenger carrier Air India seems to have run into trouble, as no bids were received for the cash-strapped airline.

According to the Ministry of Civil Aviation, “no response” was received till 5 p.m. on Thursday which was the extended submission deadline for the ‘Expression of Interest’ (EOI) bids under Air India’s divestment process.

“As informed by the Transaction Adviser, no response has been received for the Expression of Interest floated for the strategic disinvestment of Air India,” the ministry said in a tweet.

“Further course of action will be decided appropriately.”

As per the process timeline, the submission deadline for the EOI bids was earlier extended to May 31 from May 14.

Consequently, the date for the “intimation to the Qualified Interested Bidders” — QIB — which was supposed to have been the next stage was also extended to June 15 from May 28.

It was expected that by August-end, the government will be able to determine the highest bidder.

Interestingly, the government on May 1 had released a detailed document on clarifications sought by interested bidders regarding the divestment process.

There were several queries raised on the government’s plans to retain 24 per cent stake in the divested entity, provision of ESOPs (employee stock ownership plan) and on the total debt and liabilities which are expected to remain with AI.

The clarification document outlined that net current liabilities as Rs 88,160 million (Rs 8,816 crore) and “these will remain with AI and AIXL (Air India Express) as these have been incurred in the course of business.”

“After deducting INR 88,160 mn from INR 333,920 mn, the remaining figure of INR 245,760 mn is the debt and liability quantum that will remain with AI and AIXL.”

On March 28, the central government had issued a Preliminary Information Memorandum (PIM) inviting “EoI” for the strategic divestment of AI, along with the airline’s shares in AIXL and AISATS (Air India SATS Airport Services) from private entities including the airline’s employees.

The central government owns 100 per cent equity of Air India. In turn, the airline holds full stake in Air India Express, while it holds 50 per cent stake in the joint venture AISATS.

Accordingly, it has been planned to divest 76 per cent government stake in AI, 100 per cent in AIXL and 50 per cent in AISATS.

Sarkaritel
By Sarkaritel May 31, 2018 20:58