Monday, October 19, 2020

Air India bid deadline may be extended till Dec 15, govt to ease asset valuation norm

New Delhi: To attract potential suitors, the government will ease asset valuation norms for Air India by allowing bidders to put in offers on an enterprise value basis, a source said on Monday.

To begin with, the government is likely to further extend the deadline for putting in a preliminary expression of interest for the loss-making national carrier to December 15.

The source said bids will be sought on an enterprise value basis – a popular valuation methodology for takeover deals.

Enterprise value (EV) is a measure of a company’s total value, often used as a more comprehensive alternative to equity market capitalization. EV includes in its calculation the market capitalization of a company but also short-term and long-term debt as well as any cash on the company’s balance sheet.

The source said the government would remove from the Preliminary Information Memorandum (PIM) the quantum of debt to be assumed by the bidder.

The bidders would also be asked to place offers for the entire company, 85 per cent of which would be considered to go towards debt repayment and the balance would accrue to the government, the source said.

“Changes are being made to the valuation method. CGD (Core Group on Disinvestment) has approved it and it would be placed before AISAM (Air India Specific Alternative Mechanism). The deadline for Air India bid is proposed to be extended till December 15,” the source told PTI.

This would be the fifth extension to the Air India bid deadline with the current one ending on October 30.

After its unsuccessful bid to sell Air India in 2018, the government in January 2020 restarted the divestment process and invited bids for selling 100 per cent of its equity in the state-owned airline, including Air India’s 100 per cent shareholding in AI Express Ltd and 50 per cent in Air India SATS Airport Services Private Ltd.

19/10/20 PTI/Indian Express

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