Date extension: Govt to now announce qualified bidders for Air India sale next year

Dec 10,2020

According to a notification published by DIPAM, physical copies of the EoI submitted by email should be sent within 15 days of EoI deadline instead of seven
Under the new bidding structure, interested bidders now need to bid Enterprise Value (EV) of Air India
New Delhi: While extending the deadline for the submission of physical copy of e-mailed Expression of Interest (EoI) for Air India sale, the Centre has also extended the date of intimation for qualified interested bidders (QIB) to January 5. According to a notification published by the Department of Investment and Public Asset Management (DIPAM), physical copies of the EoI submitted by email should be sent within 15 days of EoI deadline instead of seven.

“Consequent to above change in Clause 10.17 of the PIM, date of Intimation to the Qualified Interested Bidders (QIB) should be read as 5th January, 2021,” the notification added. The deadline for EoI submission for Air India sale is closing on December 14.

Air India sale: New bidding structure
In order to woo investors, the government has introduced a new bidding structure for bidders. Interested bidders now need to bid Enterprise Value (EV) of Air India, wherein EV will be aggregation of debt and equity of Air India as assessed by the bidder in its financial bid. On the date of closing, debt which is lower of either the outstanding debt of AI and AIXL combined or 85 percent (or lower) of the EV, will remain as debt.

The backdrop
Media reports have claimed that the government is considering reducing Air India’s debt further in order to woo buyers. The debt of the national carrier stood at Rs 58,255 crore on March 31, 2019. Later in 2019, the government transferred Rs 29,464 crore of the debt from Air India to a government-owned special purpose vehicle called Air India Assets Holding Company Ltd (AIAHL). The COVID-19 pandemic has dealt a serious blow to the already financially battered airline. Civil Aviation Minister Hardeep Singh Puri had said in a written response submitted in the Lok Sabha during the Monsoon Session, “Air India has incurred a net loss of Rs 2,570 crore in the first quarter of 2020-21 as compared to a net loss of Rs 785 crore sustained in the corresponding period a year ago."