- Saturday, April 27, 2024
By: Shubham Ghosh
INDIAN conglomerate Tata Group’s takeover of the country’s national carrier Air India is most likely to be delayed by a month as the completion of procedures is taking longer than expected, an official source on Monday (27) said.
The Indian government accepted in October the highest bid made by a Tata Sons company for 100 per cent equity shares of Air India and Air India Express along with its 50 per cent stake in ground-handling company AISATS (Air India SATS Airport Services Private Limited) – the first privatisation in two decades.
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At that time, the government said that it wanted to complete the transactions that included the Tatas paying Rs 2,700 crore (£268 million) in cash by the end of December.
As per the conditions in the share purchase agreement (SPA), all formalities of handover would have to be carried out within eight weeks but the date can be mutually extended by the buyer and seller and is being done in the case.
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Some regulatory approvals are yet to come in for the handover and certain formalities are yet to be completed, an official source told the Press Trust of India on condition of anonymity.
“The process would be completed by January,” he said without giving a specific date.
On October 25, the government had signed the SPA with Tata Sons for the sale of Air India for Rs 18,000 crore (£1.7 billion). Tatas would pay Rs 2,700 crore cash and take over Rs 15,300 crore (£1.5 billion) of the airline’s debt. The cash component would come once the handover process is finished, another official said.
Tatas beat the Rs 15,100-crore (£1.4 billion) offer by a consortium led by SpiceJet promoter Ajay Singh and the reserve price of Rs 12,906 crore (£1.2 billion) set by the government for the sale of its 100 per cent stake in the loss-making carrier.
As of August 31, Air India had a total debt of Rs 61,562 crore (£6.1 billion). Seventy-five per cent of this debt or Rs 46,262 crore (£4.1 billion) will be transferred to a special purpose vehicle AIAHL (Air India Assets Holding Limited) before handing over the loss-making airline to Tata Group.
Tatas will not get to retain non-core assets, such as the Vasant Vihar Housing colony of Air India, Air India Building at Nariman Point, Mumbai, and Air India Building in New Delhi. Of the 141 Air India aircraft that Tatas will get, 42 are leased planes and 99 are owned.
While this will be the first privatisation since 2003-04, Air India will be the third airline brand in the Tatas’ stable. It holds a majority interest in AirAsia India and Vistara, a joint venture with Singapore Airlines Ltd.
(With PTI inputs)
