The divestment of Air India restarted on Monday with the government seeking to sell 100 per cent of its equity share capital in the state-owned airline, including Air India’s shareholding interest of 100 per cent in AI Express Limited and 50 per cent in Air India SATS Airport Services Private Limited.

The sale will be implemented through the open bidding route, with March 17 being set as the deadline for interested parties to submit their bids. Those interested in bidding for Air India must have a net worth of ₹3,500 crore.

Sources close to the development told BusinessLine that the government hopes to identify the pre-qualified bidders by March 31 and after that the second stage of the divestment process will begin with price bids being called to eventually decide who Air India will be sold to. It is likely to take another two to three months after March for the entire process to be completed. Ernst & Young is the transaction advisors for the divestment process.

Unlike the previous failed bid to sell AI, this time the government has decided to off-load its entire stake. Further, the debt has been reduced to ₹23,286 crore from ₹60,074 crore previously. The government has also clarified that the net working capital is zero, which means that the Maharaja’s current assets are equal to its current liabilities. In addition, potential bidders are to be provided with the draft share purchase agreement. To provide greater confidence to the bidders the government has also got a vendor due diligence done, people close to the development said.

The bid document states that the Confirmed Selected Bidder shall ensure that 3 per cent of the equity shares of the company acquired by it (or the special purpose vehicle in case investment in Air India is made through a special purpose vehicle) are offered to the permanent employees of Air India as per the terms of an employee stock ownership plan (ESOP). The detailed terms and conditions of the ESOP will be provided at the Request for Proposal (RFP) stage.

The document further states that the “Confirmed Selected Bidder shall ensure that AI and Air India Express Limited (AIXL) continue their business of providing air transport services on a going concern basis for a period of three years from the date of the closing of the Proposed Transaction on terms as may be specified in the definitive documents provided the foregoing shall not restrict route rationalization by AI and AIXL or any actions, steps or decisions taken for operational and financial efficiency of AI and AIXL.”

The Confirmed Selected Bidder will be mandated to ensure the Company continues using the ‘Air India’ brands. The terms of such usage will be as set out in the definitive documents.

Further, the document states that the confirmed selected bidder and the special purpose vehicle (if any) shall ensure that for a period of one year from the date of the closing of the Proposed Transaction, there is no transfer, disposal and/or creation of an encumbrance on assets owned by AI and AIXL or any such action except through the sale or transfer in the ordinary course of business and this shall not exceed ₹1,000 crore.

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