Government:- Tata Sons winning bid of Rs 18,000 cr for Air India

Tata Sons' winning bid of Rs 18,000 cr for Air India higher than reserve price of Rs 12,906 cr set by government

Tata Sons' winning bid of Rs 18,000 cr for Air India higher than reserve price of Rs 12,906 cr set by government

Software-based salt conglomerate Tatas won the bid for Air India, a government-owned company in debt, offering Rs 18,000 crore to acquire 100% of the shares, a senior official said on Friday.
One successful bidder was an SPV from Tata Sons - the conglomerate's holding company - said Tuhin Kanta Pandey, secretary of the Department of Investment and Public Asset Management (DIPAM) - the relevant government department.

Tata Sons hit the SpiceJet promoter to take over Air India.

DIPAM's secretary said the Tatas offer of Rs 18,000 crore includes taking on 15,300 crore of debt and paying the balance in cash. The government will receive Cr 2,700 cash from Tatas for the sale of their 100% stake, the DIPAM secretary said. Tata Sons' offer of Rs 18,000 crore for Air India exceeds the government reserve price of Rs 12,906 crore, the official added. The transaction is expected to close in late December 2021, Pandey said.

Both bidders are quoted above the reserve price, he said, adding that the deal is expected to close in December.

He said a group of ministers including Home Affairs Minister Amit Shah, Finance Minister Nirmala Sitharaman, Commerce Minister Piyush Goyal and Civil Aviation Minister Jyotiraditya Scindia have approved the offer for Air India. s Tata Sons Pvt. Ltd on the sale of the GOI's 100% shareholding in Air India and Air India's stake in AIXL and AISATS. The transaction involves non-core assets, including Rs 14.718 billion in land and buildings to be transferred by the GOI to Air India Asset Holding Limited (AIAHL).
This marks Air India's return to the Tatas.  "Welcome Back Air India," said Ratan Tata, Tata Sons' chairman emeritus on Twitter after the announcement.

Jehangir Ratanji Dadabhoy (JRD) Tata founded the airline in 1932. It was then called Tata Airlines. In 1946 the aviation division of Tata Sons was listed as Air India and in 1948 Air India International began flights to Europe.
The international service was one of the first public-private partnerships in India, with the state holding 49%, the tatas 25% and the public holding the rest. Air India was nationalized in 1953.

The government is selling 100% of its stake in the national airline, including Air India's 100% stake in AI Express Ltd and 50% in Air India SATS Airport Services Private Ltd.

The share sale process that began in January 2020 has been delayed due to the COVID-19 pandemic. In April 2021, the government asked potential bidders to make financial offers. September 15th was the last day to make financial offers.

The Tata Group was one of several companies to submit an Initial Expression of Interest (EoI) to purchase the Maharaja in December 2020.

As the previous efforts had not garnered much interest since 2017 and according to comments from potential investors, in October of last year, the government tightened the EoI clause regarding the transfer of debt from Air India to the new investor, giving bidders the flexibility to decide on the huge debts they wish to incur. take charge.

According to Air India's EoI published by DIPAM in January 2020, the buyer is expected to accept Rs 23,286.5 billion out of the total debt of Rs 60.074 billion as of March 31, 2019.

The rest would be transferred to Air India Assets Holding Ltd (AIAHL), a specially designed structure. Air India has suffered losses since its merger with the national carrier Indian Airlines in 2007.

The airline will give Tata control of 4,400 domestic and 1,800 international landing and parking spaces at domestic airports and over 900 parking spaces at foreign airports.

Sources:- business standards



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