The government of India has decided to extend the bid deadline for Air India's stake sale to May 31, 2018.
The government on Tuesday issued a corrigendum that subsequently extends the deadline for announcing the successful bidder to June 15, 2018.
These announcements were made after the government made its response to interested bidders queries regarding Air India
The government is looking at divesting 76% of its stake in
Air India but will be retaining 24%.
In a big clarification, the government has said that individuals other than the airline’s employees will not be allowed to bid for the Maharajah.
The government has received 160 queries regarding Air India’s divestment ranging from financials, actual debt,
Air India initial public offering, employees concerns and more.
The government has not been able to give a clear picture on the fate of employees despite questions raised regarding any voluntary retirement scheme.
But a government official close to the development said interested bidders are not worried about employees.
According to this document, the government has tweaked the norms for consortiums by allowing them to change members only before the Expression of Interest (EOI) bid deadline. It adds that the lead member cannot be changed at any point in the consortium.
“Any change prior to the EOI dealine is permissible by withdrawing the EOI and submitting fresh EOI before the EOI deadline. If after shortlisting of bidders, a consortium bidder or a sole bidder desires to form a consortium by inducting new members, it shall have to apply for approval for such change no later than 15 days from the issuance of RFP,” the government’s corrigendum clarifies.
There have been questions raised regarding government’s decision to retain 24% stake. In fact, interested bidders have suggested that the government should look at divesting 100% stake.
One of the queries suggest: “If the interest of the government is simply to capture an upside, rather than retaining equity stake, can we not agree on any other structure such as a payout to be made to GoI based on FMV 3-5 years post-Closing? This will allow the government to divest 100% while retaining upsides.”
While noting suggestions regarding its stake in the new Air India, the government has clarified that “it has been a considered decision” and ESOPS will also be provided from government’s holding in the new entity.
As far as listing of the new entity is concerned, the government has clarified that the buyer will not be required to list the Air India within any stipulated time line.
A source close to the whole divestment process told CNBC-TV18 that “it wasn’t government’s intention to make IPO mandatory and there is no three year deadline to list Air India post divestment.”
This ambitious divestment process has been given a political turn by leaders like Subramanian Swamy asking the government to postpone this stake sale till 2019 elections. This also features as a query in the document where government has responded by saying “this question is irrelevant to the PIM.”
For over 50 queries related to financials, shareholding, Air India’s FY18 consolidated audited financial statements, actual debt figure and more, the government has said that details will be provided at the RFP stage.
A lot of companies have raised concerns regarding arms-length. The government has clarified that while the bidder will have to maintain arms-length distance with other firms, they would, however, be allowed to realise operational synergies.An official explained that complete integration of Air India with the successful buyer’s other businesses will not be possible till the transaction process is completed.