(Image source from: businesstoday.in)

The government has invited bids to sell its 100% stake in Air India and Air India Express and its 50% stake in the ground handling JV AI-SATS as it has rolled out the process to sell Air India.

The parties that are interested will have to submit their expression of interest (EOI) by 5 pm on 17th of March, 2020 and the bidders that are qualified will be notified by 31st of March.

The preliminary information memorandum (PIM) says that there might be a change regarding the dates of the submitting the Expression of Interest (EOI) and the date of notifying the qualified bidders.

The debt combining the Air India and Air India express is Rs 60,074 crore and the Interested bidders (IB) are going to be expected for taking over Rs 23,286 crore of the combined debt.

A request for proposal (RFP) that is said to be issued on March 31 will be mentioning that the name of the brand Air India and the terms associated with it should be retained by the successful bidders for a specific time period.

The iconic Nariman Point HQ that is situated in Mumbai and the corporate HQ in Delhi which is near the Connaught Place will not be a part of the transaction and will remain with the government. The preliminary information memorandum states that Air India is in possession of various articles of arts, paintings, objects and artifacts and all of those are not a part of the transactions that are being proposed.

The Nariman Point HQ in Mumbai and the corporate HQ in Delhi will be allowed to be used by the successful bidder for a couple of years during the transition period.

As the first bid was unsuccessful, there were key changes that have been made which included offering to sell 100% government take in Air India and Air India Express. This has been changed from the government take in Air India and Air India Express being 76% earlier.

The new owner will be provided with the complete operational freedom with the change in the government take in Air India and Air India Express.

Another key change that has been made in order to make the bid successful is the debt that is expected to be taken over has been reduced.

Earlier, the bidders were expected to take over a complete debt of Rs 33,392 which included the take over debt of Rs 24,576 and current liabilities of Rs 8,816 crore where as, currently the debt that is expected to be taken over has been reduced by almost a third to Rs 23,286 crore and the rest is backed by aircraft part of the transaction.

Presently, the principle that is being followed in the bidding is to make the current assets equal to the current liabilities for the bidders.

However, the entire working capital and the other debt regarding the non-aircraft debt will be retained by the government. The adviser for the transaction is said to be Ernst & Young LLP India.

It says that the eligibility of participation is for any public or private limited company, limited liability partnership, body corporate, whether registered or incorporated in India or outside the country India or fund in each case which has the eligibility to invest under the laws of India which can be either as a sole bidder or as a part of Consortium.

The minimum net worth for the interested bidder be it the sole bidder or the consortium should be Rs 3,500 crore and each member that is participating should have a minimum net worth of Rs 350 crore.

However, the criteria of minimum net worth will not be applied if a schedule Indian carrier is a member of the consortia with up to 51% of the equity shareholding in the consortia.

The net worth criteria ought to be met by the foreign airlines and all the scuffle Indian airlines except IndiGo will be having a negative net worth. The criteria says that the negative net worth will be considered as nil only if it is a scheduled operator in India and the minimum financial capability should be met by the remaining members of the consortium.

This is said to be the second attempt being made in order to sell the debt- ridden Air India airline.

By Shrithika Kushangi