Flag carrier Air India, disinvestment of which is underway, has sought bids from financial institutions for lending Rs 700 crore to the airline as government-guaranteed short-term loan.
As per the preliminary information memorandum issued by the government to sell 100 per cent of its stake in the airline, the Centre has tweaked certain conditions and established a principle to bundle only as much debt with the airline against which the new investor will be getting the same worth of assets.
Only an amount of Rs 23,286.50 crore will be bundled with the airline and this amount, government officials said, has been frozen to provide certainty to bidders. However, in addition to this, certain identified current and non-current liabilities other than debt will also be bundled with the disinvestment package.
This amount, as of March 31, 2019, stands at Rs 8,771.50 crore, taking the combined debt and liabilities that the buyer will take on to Rs 32,058 crore.
The remaining debt will be transferred to the special purpose vehicle Air India Asset Holding Ltd (AIAHL), and the government will repay the debt either by disposing off assets such as land and buildings held by AIAHL or by making budgetary provisions.
According to sources, the fresh fund-raise of Rs 700 crore will be utilised for salary payments, in addition to meeting some debt obligations that will be maturing over the next few months. The airline has given time till March 15 to lenders to submit their bids.
At the time of unveiling the preliminary information memorandum for Air India’s disinvestment, government officials had said that any loans taken by the airline thereafter would be transferred to the special purpose vehicle, thereby ensuring a level of certainty as far as the airline’s debt situation was concerned.
Meanwhile, the Centre has extended the time till March 6 for bidders to pose additional queries regarding sale of its 100 per cent stake in Air India. The government has issued the first set of clarification on Air India disinvestment answering queries of interested bidders on the ‘confidentiality undertaking’ listed out in the preliminary information memorandum issued on January 27.
The last date for submission of written queries on preliminary information memorandum and share purchase agreement was originally set at February 11, following which the Department of Investment and Public Asset Management, on February 21, issued a set of 20 clarifications on the queries raised.
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