After Civil Aviation Minister declared that Air India will close down, or sold to private firms, reports have emerged that the sale process can be postponed by upto 3 years.
Reducing the debt exposure of the new buyer is also a possibility, but seems like a distant dream as of now.
It seems no one is interested to buy Air India.
Air India Sales Can Be Postponed by 3 Years?
An unnamed, but well placed Govt source has informed Hindustan Times that Aviation Ministry can defer the sale of Air India, by upto 3 years, since no buyer is interested right now, due to coronavirus impact.
The huge debt of Air India is another reason why the sale can be postponed.
October 30th was the latest deadline for finalizing the sale of Air India, but Govt will be forced to extend that as well.
The deadlines of Air India sale have been extended quite a few times in the last couple of years.
Govt Will Further Reduce Debt Exposure?
The reports also claim that the debt exposure of the new potential buyer of Air India will be further reduced in order to sweeten the deal.
Out of Rs 60,074 crore debt of Air India, Govt had already announced a reduced debt exposure of Rs 23,286 crore for the buyer. This means, that instead of Rs 60,074 crore debt, the new buyer will be needed to repay only Rs 23,286 crore of debt.
The rest of the debt will be transferred to a special purpose vehicle called Air India Assets Holding Ltd.
Now, this reduced debt exposure can be further reduced.
One of the officials said, “The option of allowing bidders to quote both debt and equity value appears practical in the current domestic and global business environment, but a final call will be taken by the competent authority,”
It seems that Govt will attempt to create a scenario wherein the potential buyers can bid on the Govt equity’s current valuation and subsequently take forward the takeover.
But since coronavirus has slowed down entire aviation sector, this reduced debt exposure too seems unfeasible under current circumstances.
Postponing the sale of Air India seems the only way forward now.
We will keep you updated, as more details come in.
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