Government Might Not Sell Air India If Bids Below Floor Price
The central government might not sell its stake in the ongoing divestment process of the national passenger carrier Air India, if bids do not meet a minimum threshold value or floor price estimated for the airline.
Civil Aviation Secretary Rajiv Nayan Choubey said that the government had hired asset and enterprise valuers, who have estimated a minimum floor price or net worth of Air India under the current divestment norms.
According to Choubey, just like any bidding process, the qualified bids have to be above the floor price. “The government retains the right to sell or not to sell Air India, if the bid price is found to be inadequate…,” Choubey told reporters in New Delhi.
However, Civil Aviation Secretary said that there has been a substantial interest that has been generated around the process and that the government expects a robust response.
As per the process timeline, the submission deadline for the ‘Express of Interest’ (EOI) bids has been extended to May 31, 2018.
Consequently, the date for the “intimation to the Qualified Interested Bidders” (QIB) has also been extended to June 15 from May 28.
It is expected that by August-end, the government will be able to determine the highest bidder.
The highest bidder also needs to meet regulatory requirements such as security clearances and substantial ownership and effective control should vest with Indian nationals.
On March 28, the central government had issued a Preliminary Information Memorandum (PIM) inviting “EoI” for the strategic divestment of AI, along with the airline’s shares in AIXL (Air India Express) and AISATS (Air India SATS Airport Services) from private entities including the airline’s employees.
The central government owns 100 per cent equity of Air India. In turn, the airline holds full stake in Air India Express, while it holds 50 per cent stake in the joint venture AISATS.
Accordingly, it has been planned to divest 76 per cent government stake in AI, 100 per cent in AIXL and 50 per cent in AISATS.