The central government has revised the bid standards for the division of Air India and has decided to bid on the enterprise price. Union Civil Aviation Minister Hardeep Puri announced on Thursday that bids would be sought on the enterprise value, with bids on both equity and debt.
The decision was taken by Air India’s Specific Alternative Mechanism (AISAM) on Wednesday after a meeting with the Ministry of Home Affairs.
Keeping in mind the impact on Air India and the significant deterioration of the operating environment for airlines, various options were considered for the disinvestment of Air India. AISAM has decided to change the binding parameters and bid on enterprise value. Bids on equity and debt will be invited. In the current PIM, the debt in the company would be Rs 23,286 crore, ”Puri said.
The Center has also extended the deadline for inviting bids till 14 December.
In August, the Center issued a notification to extend the deadline for submission of interest for sale of 100% stake of national carrier Air India by two months to 30 October.
According to the notification issued by the Department of Investment and Public Asset Management (DIPAM), the extension was granted following a request from interested bidders due to the prevailing Kovid-19 epidemic.
For the third time in June after the process started in January, the Center extended the deadline for submission of bids for the division to 31 August.
The national carrier was placed on the block by the government on 27 January while a deadline of 31 March was set. It was later extended to 30 June and then first to 31 August.
The government is planning to sell its entire stake in Air India Ltd amid mounting debt and mounting losses. Earlier this year, the Center announced in January to sell a stake in a debt-ridden airline, after which an attempt to auction a majority stake nearly two years ago failed to attract any bids.
The airline’s accumulated debt is estimated to be over Rs 69,000 crore. It reported a loss of Rs 8,556 crore in FY19, compared to a net loss of Rs 5,348 crore in the previous financial year.
In June, the civil aviation minister, during a press briefing, called the national carrier a ‘first-class asset’ and said the government was confident and hopeful about its divestment plan.
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