Tata Sons are set to file the Expression of Interest (EoI) for a strategic disinvestment process of Air India, sources told CNBC-TV18.
The development comes as the deadline for filing the EoI ends today. Sources said that at this point of time the Tatas are exploring various options on how to carry out this transaction as the group has already run two airlines in India – one, a joint venture with Singapore Airline which is a full service carrier, and the other being the joint venture with Air Asia.
“We have already seen Tony Fernandes coming out on record and saying that the relationship is under review and all options have been considered. We are also given to understand that perhaps the Tata could look at buying Tony Fernandes from Air Asia joint venture and this might be used as vehicle to board Air India because there is a non-compete clause for a full service carrier operation with the Tata-Singapore Airline joint venture,” CNBC-TV18 reported.
The government has this time substantially sweetened the sale terms for AI. It has offered for sale its 100% stake in AI and AI Express — instead of 76% in the first attempt — and the entire 50% it owns in ground handling joint venture AI-SATS. Also, potential buyers will now bid on an enterprise value (EV) basis.
This means instead of being required to take on a pre-fixed level of Rs 23,000 crore debt of the airline, they will now quote an EV based on their estimate of the combined value of AI’s equity and debt. Winning bidders will be decided on who quotes the highest EV value and at least 15% of this value will need to be paid in cash while the rest can be taken on as debt.
Bidders had sought clarification from the Department of Investment and Public Asset Management (DIPAM) regarding the changes. One of them, citing huge cash requirements for things like upgradation of the AI fleet and VRS scheme, suggested the government sell AI without asking for any upfront cash payment.
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