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This time, no problem in Air India's divestment: Minister
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SME Times News Bureau | 17 Feb, 2020
Civil Aviation Minister Hardeep Singh Puri on Monday expressed
confidence that this time around, there will be no problem in Air
India's divestment.
He was speaking here at an event held to
distribute the "Letters of Appreciation" issued by Prime Minister
Narendra Modi to the staff of Air India who conducted evacuation
operation of stranded Indians from China's Wuhan city, the epicentre of
the Coronavirus outbreak.
The Minister's comments assume significance since the last attempt to divest stake in Air India had failed.
According to the minister, the divestment process has received a healthy response.
The
government expects to complete sale of Air India in the first half of
the next fiscal, according to the Department of Investment and Public
Asset Management (DIPAM).
Last month, DIPAM had invited an
Expression of Interest (EoI) from potential investors for selling 100
per cent of Air India and its stake in two subsidiaries with easy
bidding norms of debt and eligibility, in its second attempt to
privatise the debt-laden state-run airline.
The deadline for
submission of the EoI for 100 per cent divestment in Air India and the
airline's stake in low-cost unit Air India Express and airport services
company AISATS is March 17, according to a preliminary information
memorandum issued by DIPAM on Monday.
Since the huge debt had
proved unattractive for potential bidders, now, the government has
relaxed bidding norms to coax investors to buy the airline. The bidding
party will have to bear with only Rs 23,286 crore of the total Rs 60,000
crore debt of Air India.
As for eligibility, the lead member of a
consortium can have 26 per cent shareholding. The earlier criterion set
a holding of 51 per cent in a consortium. The minimum shareholding in a
consortium has also been eased to 10 per cent, potentially enabling
more entities to bid as part of a consortium.
The net worth for eligible bidders has been relaxed to Rs 3,500 crore from Rs 5,000 crore.
Furthermore, the consolidated business in the past had a mix of real estate and aviation interests.
However,
this time, the government is carving out real estate assets and other
businesses which are not integral to the core airline business into a
separate SPV along with part transfer of certain debt and liabilities
(modalities have been worked out) thereby resizing the balance sheet.
The government had earlier struggled to privatise the loss-making airline due to a lack of interest from bidders.
One
reason for the failure was that the government was unwilling to fully
exit the airline, looking to sell only 76 per cent stake.
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