New Delhi: The government on Monday issued a letter of intent (LoI) confirming the sale of its 100 per cent stake in loss making. Air India 18,000 crore to the Tata group, a senior official said.
Last week, the government accepted a proposal by Salt-to-Software group’s holding company Tales Pvt Ltd to pay Rs 2,700 crore in cash and take over Rs 15,300 crore of the airline’s debt.
After that, an LOI has now been issued to Tata confirming the government’s willingness to sell its 100 per cent stake in the airline.
“Letter of intent has been issued today,” DIPAM secretary Tuhin Kanta Padne told PTI here.
Tata will now have to accept the LOI, after which the share purchase agreement will be signed. The pre-transactional conditions will need to be satisfied by the Tatas before actually handling the operations.
“Generally within 14 days of the acceptance of the LOI, the SPA is signed. We expect the SPA to be signed fairly expeditiously,” he added.
Pandey said the target is to complete the deal by the end of December. After the signing of the SPA, regulatory approvals have to come after which the handover process begins.
“When they give the acceptance letter, they will give a payment security of 1.5 per cent of the EV value which is Rs 270 crore. The Rs 270 crore bank guarantee will be the payment security which we will receive along with the acceptance letter to the LOI,” Pandey said.
He said the cash portion of the deal would come on the day of handover, which would be by the end of December.
The deal also includes the sale of Air India Express and ground handling arm AISATS.
Tata surpassed the Rs 15,100 crore offer by SpiceJet promoter Ajay Singh-led consortium and the Rs 12,906 crore reserve price set by the government for the sale of its 100 per cent stake in the loss-making carrier.
While this will be the first privatization since 2003–04, Air India will be the third airline brand in the Tata stable – it has a majority stake in Vistara, a joint venture with AirAsia India and Singapore Airlines Ltd.
Air India will provide it with access to 117 wide-body and narrow-body aircraft and 24 other narrow-body aircraft of Air India Express Limited along with 4,400 domestic and 1,800 international landing and parking slots as well as 900 at domestic airports. Slots at airports abroad, such as London’s Heathrow.
In addition, the bidder will get 100 per cent of the low-cost Air India Express and 50 per cent of AISATS, which provides cargo and ground handling services at major Indian airports.
With the current combined market share of Air India, Vistara and Air Asia at 26.9 per cent, the Tata group will emerge as the second largest domestic airline after IndiGo when the integration of the operations of the three airlines is completed.
Air India has been in loss since its merger with Indian Airlines in 2007. It has the dubious distinction of having the most personnel on its roll per aircraft.
The transaction with Tata does not include non-core assets, including land and building, valued at Rs 14,718 crore, to be transferred to the government’s Air India Asset Holding Limited (AIAHL).
AIAHL will account for the remaining Rs 46,262 crore (total debt of Rs 61,562 crore, of which Rs 15,300 crore will go to Tata) of the airline.
Last week, the government accepted a proposal by Salt-to-Software group’s holding company Tales Pvt Ltd to pay Rs 2,700 crore in cash and take over Rs 15,300 crore of the airline’s debt.
After that, an LOI has now been issued to Tata confirming the government’s willingness to sell its 100 per cent stake in the airline.
“Letter of intent has been issued today,” DIPAM secretary Tuhin Kanta Padne told PTI here.
Tata will now have to accept the LOI, after which the share purchase agreement will be signed. The pre-transactional conditions will need to be satisfied by the Tatas before actually handling the operations.
“Generally within 14 days of the acceptance of the LOI, the SPA is signed. We expect the SPA to be signed fairly expeditiously,” he added.
Pandey said the target is to complete the deal by the end of December. After the signing of the SPA, regulatory approvals have to come after which the handover process begins.
“When they give the acceptance letter, they will give a payment security of 1.5 per cent of the EV value which is Rs 270 crore. The Rs 270 crore bank guarantee will be the payment security which we will receive along with the acceptance letter to the LOI,” Pandey said.
He said the cash portion of the deal would come on the day of handover, which would be by the end of December.
The deal also includes the sale of Air India Express and ground handling arm AISATS.
Tata surpassed the Rs 15,100 crore offer by SpiceJet promoter Ajay Singh-led consortium and the Rs 12,906 crore reserve price set by the government for the sale of its 100 per cent stake in the loss-making carrier.
While this will be the first privatization since 2003–04, Air India will be the third airline brand in the Tata stable – it has a majority stake in Vistara, a joint venture with AirAsia India and Singapore Airlines Ltd.
Air India will provide it with access to 117 wide-body and narrow-body aircraft and 24 other narrow-body aircraft of Air India Express Limited along with 4,400 domestic and 1,800 international landing and parking slots as well as 900 at domestic airports. Slots at airports abroad, such as London’s Heathrow.
In addition, the bidder will get 100 per cent of the low-cost Air India Express and 50 per cent of AISATS, which provides cargo and ground handling services at major Indian airports.
With the current combined market share of Air India, Vistara and Air Asia at 26.9 per cent, the Tata group will emerge as the second largest domestic airline after IndiGo when the integration of the operations of the three airlines is completed.
Air India has been in loss since its merger with Indian Airlines in 2007. It has the dubious distinction of having the most personnel on its roll per aircraft.
The transaction with Tata does not include non-core assets, including land and building, valued at Rs 14,718 crore, to be transferred to the government’s Air India Asset Holding Limited (AIAHL).
AIAHL will account for the remaining Rs 46,262 crore (total debt of Rs 61,562 crore, of which Rs 15,300 crore will go to Tata) of the airline.
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