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Govt revamps Air India sale terms

  • As per the new offer, Air India will be offered on its enterprise value and bidders can quote the level of debt they are comfortable with
  • The move is to make the offer as flexible and market linked as possible, senior officials from civil aviation and finance ministries explained

New Delhi: The government has revamped the terms for selling distressed national carrier Air India, shelving the earlier offer of the company along with a fixed level of debt, civil aviation minister Hardeep Puri said on Thursday.

As per the new offer, Air India will be offered on its enterprise value and bidders can quote the level of debt they are comfortable with. The investor who quotes the highest enterprise value gets the carrier. The move is to make the offer as flexible and market linked as possible, senior officials from civil aviation and finance ministries explained.

“After detailed preparations, we revisited this (earlier offer for sale) and it was decided to change the bidding parameters and ask for bids at the enterprise value that is, bids will be invited on equity and debt basis," Puri said.

The crux of the new offer is that the government will not pre-determine the level of debt that Air India will carry with it to the new owner, explained Tuhin Kanta Pandey, secretary in the department of investment and public asset management.

“That does not mean it is becoming debt-free. The level of debt that will go with Air India will be determined by the market rather than we determining it. We are doing it because it is an uncertain environment. We are unshackling it. It does not mean that valuation will be affected. The valuation will be determined by the market," explained Pandey.

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