NE BUSINESS BUREAU
NEW DELHI, OCT 8
The Cabinet Committee on Economic Affairs (CCEA)-empowered Air India Specific Alternative Mechanism (AISAM) on Friday approved the highest price bid of Talace Pvt. Ltd.
With this approval, Air India has finally gone back to its original promoters — Tata Sons — in a deal worth Rs 18,000 crore. This concludes a four-year bidding process for privatisation of the national carrier.
- The total debt on the books of both Air India and Air India Express is Rs 61,562 crore.
- Debt worth Rs 15,300 crore will be taken over by the winning bidder
“Finance minister Nirmala Sitharaman had said in her budget speech that the government wants to complete Air India disinvestment in 2021-22. CCEA-led Air India Specific Alternative Mechanism (AISAM) has approved the winning bid,” Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said.
“The Cabinet Committee on Economic Affairs (CCEA)-empowered Air India Specific Alternative Mechanism (AISAM) approved the highest price bid of Talace Pvt. Ltd., a wholly owned subsidiary of Tata Sons Pvt. Ltd. for sale of 100% equity shareholding of Government of India in Air India along with equity shareholding of Air India in AIXL and AISATS,” the government said in a release.
“The winning bid is for Rs 18,000 crore as enterprise value (EV) consideration for AI (100% shares of AI along with AI’s shareholding in AIXL and AISATS). The transaction does not include non-core assets including land and building, valued at Rs 14,718 crore, which are to be transferred to the government’s Air India Asset Holding Limited (AIAHL),” the release added.
Statement from N. Chandrasekaran, Chairman of Tata Sons, on winning the Air India bid. #ThisIsTata pic.twitter.com/OOdY1aVi0y
— Tata Group (@TataCompanies) October 8, 2021
According to the deal, Talace Pvt. Ltd. will retain the debt of Rs 15,300 crore, while the cash component for the company will be to the tune of Rs 2,700 crore. The trailing bid put in by a consortium led by Spicejet chairman and managing director Ajay Singh had offered an enterprise value of Rs 15,100 crore with debt portion of Rs 12,835 and cash component of Rs 2,265 crore.
“A letter of intent will be issued and an SPA will be signed with the successful bidder. The transaction is expected to close by the end of December this year,” Pandey added.
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Sharing the details of the debt that will be transferred to AIAHL, Pandey said, “The total debt on the books of both Air India and Air India Express is Rs 61,562 crore. Debt worth Rs 15,300 crore will be taken over by the winning bidder while the remaining Rs 46,262 crore will be transferred to AIAHL. This is government-guaranteed debt. It is a commitment of the government and it cannot be extinguished. Lenders are completely protected in government-guaranteed debt. It is lenders’ money and will have to be repaid.”
