Monday, December 02, 2019

Sufficient interest for Air India, says DIPAM secretary

As the Centre gears up to invite fresh expressions of interest (EoIs) soon for the sale of its entire stake in debt-ridden Air India, the DIPAM (Department of Investment and Public Asset Management) secretary Tuhin Kanta Pandey told FE that there is sufficient interest among potential buyers.

“There is sufficient interest from investors and the (strategic disinvestment) process of AI is moving in the right direction,” Pandey said.
Sources said AI won’t be a distress sale as it is a robust going concern and potential buyers could capitalise on its premium bilateral rights and parking slots across the world to revive its fortunes. Also, the government would take over some more debt of AI and pass on a ‘fair’ amount of debt and liabilities to the buyer.
On delays in coming out with a fresh EoI for AI, sources said preparations took a lot of time as all the information are being frontloaded this time —along with EoI, DIAPM would share the actual share purchase agreement (SPA) and other information on a real-time basis with bidders — learning from the last year’s experience.
In June last year, the government called off the proposed sale of 76% stake in AI after no buyer had shown interest. Probable reasons as analysed by transaction adviser EY for non-receipt of bids last year included the government’s decision to retain 24% stake and corresponding rights, high amount of allocated debt and profitability track record.
Sharing of the actual SPA would help investors take long-term view of various liabilities and accordingly plan their funding for the deal. Over the last few months, the DIPAM, aviation ministry and AI management, have been holding a series of meetings to place a well prepared document before buyers.
Even though employees of the national carrier — over 11,000 at last count — are likely to be offered job protection for one year, sources said new owners could find most of the existing staff useful to expand operations to meet higher demand for flights in certain international routes such as India-UK after grounding of Jet Airways.
02/12/19 Prasanta Sahu/Financial Express
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