Ratan Tata has welcomed Air India and Tata
Group Chairman N. Chandrasekharan says: “It’s a historic moment for Tata Group.”
The Indian government has at last found a buyer for its hard-pressed
national carrier, Air India and its subsidiaries. The process which began in
June 2017, concluded on Friday (8th
October) with Air India being bought for Rs 18,000 crore in enterprise
value terms—which is, debt plus equity.
The winning bidder is Tata
Sons—the privately owned holding company of one of India's largest
conglomerates. The bid was placed by its wholly-owned subsidiary Talace Pvt.
The only other bidder in the fray was a consortium led by Ajay Singh, the
principal shareholder of Spice jet Ltd. It had made a bid of Rs 15,100 crore.
The reserve price for Air India was pegged at Rs 12,906 crore by valuation
advisors to the central government.
Ratan Tata has welcomed
Air India and Tata Group Chairman N. Chandrasekharan says: “It’s a historic
moment for Tata Group.”
Air India had gone through a huge loss of Rs 83,916 crore, as in March 2021
and a total debt of Rs 61,562 crore at the end of August 2021.
Tata Sons will have to pay a debt of Rs 15,300 crore, and thereby pegging
the equity value of Rs 2,700 crore.
Tata Sons will get 100% shares of Air India along with its shareholding in
low cost carried Air India Express, and its shareholding business AISATS (Air
India SATS Airport Services Pvt. Ltd.)
In Air India, Tata Sons will get a fleet of 117 aircraft, a significant number of them owned by the National Career and bilaterals.
Other Conditions:
As per the deal, there are no restrictions on the successful bidder
undertaking mergers and acquisitions. That opens the door for the Tata Group to
consider combining Air India with its two existing aviation businesses—Vistara
Airlines, a joint venture of Tata Sons (51%) and Singapore Airlines Ltd. (49%);
and Air Asia India, a Tata Sons (83.7%) joint venture with AirAsia Investment
Ltd. (16.3%).
The restriction is that during the equity lock-in period, ownership has to
remain with the successful bidder, said the finance ministry.
No employee to be retrenched for the first one year after acquisition. And
for the second year, if anybody is to be retrenched, they will be offered VRS,
ministry officials said in a press briefing.
The eight logos under the Air India brand will go to Tata Sons. These
cannot be transferred for five years. After five years, the logos can be
transferred but only to Indian persons (legal persons), not to any foreign
entity.
The next step will be to issue the Letter of Intent and then sign the Share Purchase Agreement. "It is expected that the transaction will be completed by December 2021," a finance ministry statement said.