The Centre is unlikely to seek any previous airline experience from entities interested in picking up a stake in Air India.
Sources point out that no ‘experience’ clause was present during the disinvestment process of various other government assets. “The government goes by precedent, so it is highly unlikely that a special case will be made for Air India,” people closely associated with the divestment process said.
While officially the government has not yet said anything on Air India’s divestment, sources said that this time the entire 100 per cent shareholding of the government will be on offer. The earlier attempt by the government to sell Air India failed as no bids were received by the May deadline.
The government wanting to retain a 24 per cent stake in the carrier may have put off many of the potential bidders, leading to the failure of the first attempt at divestment, it has been observed.
To sweeten the deal this time, the airline’s debt of over ₹29,000 crore will also be shifted to a special purpose vehicle (SPV), with the new owner having to bear aircraft related and sundry debt.
Enterprise value
Sources indicated that the process has not reached the stage where the enterprise value, or what should be the total value of the company, can be finalised. To expedite this process, Air India has been asked to finalise its latest financial results at the earliest.
The divestment process is expected to kickstart in early July, with the government said to be keen on an early completion of the process. Initially it is expected that all the information which an individual can obtain by putting in a Right To Information (RTI) request with a government department will be made available to potential bidders.
Though the government is keen to complete the divestment process in a hurry, it is not uncommon to give three-six months to potential investors to put in their financial bids, on the basis of which the best possible option can be chosen.
Request for time
“It is not uncommon for potential investors to seek an extension of whatever timeframe is given for the submission of financial bids. Eventually both parties sit down and mutually decide on what is feasible and fast,” people involved in the earlier processes of divestment said while declining to put down a time line on how long the entire process will take.