New owners of debt-ridden Air India could be decided by June-end as the government intends to complete the “legal closing” of the transaction by December when the airline's assets are transferred to the winning bidder. AI will be split into five parts, with four of them- AI, AI Express, AI SATS ground handling unit, engineering units, and Alliance Air, to be offered for sale. The fifth, meanwhile, will be an SPV that will remain with the government.
The SPV will have AI's “unsustainable” debt, Centaur hotels, land and the priceless art collection the airline has gained over the years. Aviation Minister Jayant Sinha gave the fine print of AI's disinvestment in terms of value and revenue, a day after the Union Budget was announced. According to the schedule decided by the Department of Investment and Public Asset Management (Dipam), the government expects to have the winning bidder by June-end. The process is expected to be over by the end of the year.
Sinha said, “We will soon issue information memorandum for all the four entities being offered for divestment that will contain all their details. Then, interested parties will bid for whichever unit or units they wish to, with the highest bidder getting the same. This is the biggest reform being initiated by the Modi government.” He added, “There are some ways of valuing an entity. It can be done on 'ongoing entity basis', where it will be a sum multiple of cash flows.”
