Reports say that Tata Group and SpiceJet promoter Ajay Singh have been shortlisted for the bid to buy out Air India. The two will now have to submit financial bids after completing due diligence on the national carrier’s books, agreements and liabilities. In their financial bids, the parties have to state the quantum of AI’s debt they will be willing to take up and the upfront payment they will make for the asset. Whoever quotes the highest economic value for AI will be the winner of the bid.
At least 15% of AI’s enterprise value has to be paid in cash and the balance can be taken as debt. AI has a debt of over £9 billion. It is estimated that the national carrier would report a £1 billion loss this fiscal. While Tata Group will be putting in its bid through AirAsia India, in which it holds a controlling stake, Singh has firmed up plans with a Middle East sovereign fund for the acquisition, it is learned.
Sources said that Tata Group has been wooing its Southeast Asian full-service carrier partner Singapore Airlines to come on board for the AI bid. The conglomerate and Singapore Airlines run Vistara in India but the latter has shown an unenthusiastic response for AI as the Covid-19 pandemic has impacted its balance sheet. Industry has been speculating that AI would most likely go to the Tata Group.
The government hopes to complete the AI divestment by the second quarter of next fiscal. It is expected that the government will handhold the AI winner in the initial transition period when they anticipate trouble from unions and other stakeholders.
