New Delhi: A group of Air India (AI) employees are planning to bid for the divestment-bound Maharaja. With collective debt-cum-liabilities of over Rs 90,000 crore, they are trying to rope in a financial partner for the venture. As per their plan, the group of employees — each of who will need to contribute up to Rs 1 lakh — will own 51% and the investor the remaining 49%.
The Tata Group, which founded AI, is seen as the most likely bidder for the airline. The deadline for placing bids is December 14 and qualified bidders will be intimated by December 28, unless the timeline is extended again due to the pandemic.
“Financially, I know that we do not have the necessary wherewithal to participate in this bid process alone. We have accordingly sought a private equity fund who will invest in the company. Employees will own and control 51% and the financial partner the balance 49%,” an internal note circulated among the group of employees mulling this bid says.
“Until we cross expression of interest stage, no money is needed to be collected from employees… after successfully completing stage 1, we are planning our bid in such a way that no single employee will have to contribute more than Rs 1 lakh,” the note says.
The government recently tweaked AI’s divestment conditions of Air India and potential buyers can now bid on enterprise value (EV) basis. Which 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 a 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.
After this change, interested bidders sought clarification from the Department of Investment and Public Asset Management (DIPAM). One of the potential bidders asked about the 15% cash payment requirement. Citing huge cash requirement for things like upgrading AI fleet; making grounded aircraft airworthy again; VRS scheme; this party suggested that “the entire EV should be left in the company in the form of assumed debt”. Basically, asking the government to sell off AI without asking for any upfront cash payment.
03/12/20 Saurabh Sinha/Times of India
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