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AirAsia Berhad sells 32.67% stake in Indian JV to Tata Sons for $37.6 million

AirAsia India operates 175 daily flights over 20 destinations across the country, including New Delhi, Mumbai, Bengaluru, Hyderabad, Kolkata, and Ahmedabad. (Mint)Premium
AirAsia India operates 175 daily flights over 20 destinations across the country, including New Delhi, Mumbai, Bengaluru, Hyderabad, Kolkata, and Ahmedabad. (Mint)

  • AirAsia Berhad had in November said it was reviewing its Japan and India operations as they had been draining cash, causing the group much financial stress. The Malaysian airline has since ceased operations in Japan

NEW DELHI: Malaysian carrier AirAsia Berhad on Tuesday said it has sold its 32.67% stake in AirAsia India to Tata Sons for $37.66 million ( 276.10 crore), bringing down its shareholding in the airline to about 16.33%.

"The Board of Directors of AirAsia (“Directors"), wishes to announce that its wholly owned subsidiary, AAIL (AirAsia (India Limited), has on 29 December 2020 executed a Share Purchase Agreement (“SPA") with Tata Sons Private Limited (“TSL") to sell AAIL’s equity interest of 32.67% in AAI comprising 490,000,000 ordinary shares of INR 10 each, which is equivalent to 32.67% of the issued and outstanding shares of AAI, to TSL for a total consideration sum ("Purchase Consideration") of USD37,660,000," the airline said in a filing to Bursa Malaysia.

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Prior to the transaction, AirAsia Berhad held a 49% stake in AirAsia India, while Tata Sons held 51%.

As part of the transaction, Tata Sons has the option to pick up AirAsia Berhad's remaining 16.33% after the closure of the current transaction.

"In addition, there will also be a Put Option exercisable by AAIL in two tranches, with the first tranche being exercisable from 1 March, 2022, until 30 May, 2022, and the second tranche being exercisable from 1 October, 2022, to 31 December, 2022," AirAsia Berhad said in the stock exchange filing.

"The total consideration in respect of the Options granted for AAIL’s remaining 16.33% stake shall be USD18,830,000 ($18.83 million or 138.27 crore)," it said adding that the share purchase agreement may be terminated if Tata Sons doesn't close the deal before 31 March 2021.

Mint had in November reported that the Tatas plan to increase its stake in AirAsia India to beyond 51% through fund infusion which would comprise a mix of debt and equity.

AirAsia Berhad had in June approached the Group to sell its stake, as mandated by the terms of the joint venture under which Tata Sons has the first right to buy out the shares.

The Malaysian parent, struggling to recover from a global slump in travel due to the covid-19 pandemic, had stopped funding the Indian operations, hinting hinted at exiting the market, leaving AirAsia India dependent on the Tata group to fund the cash burn suffered during the pandemic.

To this extent, AirAsia Berhad had in November said it was reviewing its Japan and India operations as they had been draining cash, causing the group much financial stress. The Malaysian airline has since ceased operations in Japan.

"This Transaction will reduce cash burn of the Company in the short term and allow AirAsia to concentrate on recovery of its key ASEAN markets in Malaysia, Thailand, Indonesia and the Philippines in the long run," AirAsia Berhad said in the stock exchange filing on Tuesday.

A Tata group spokesperson didn't offer comments.

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