The government plans to hand over Air India operations to Tata Sons in December are likely to be delayed because of pending approvals and procedures. In October, the Centre signed a share purchase agreement with Tata Sons for the sale of Air India for Rs 18,000 crore. The government will get around Rs 2,700 crore cash from Tatas and they will take over Rs 15,300 crore debt.
Citing an unnamed official, Business Standard reported that the pre-determined conditions are yet to be fully met, after which the long stop date will be clear. The Centre has set a target to hand over the operations of the national carrier to Talace Pvt Ltd, a unit of the holding company of the coffee-to-cars conglomerate by December-end.
Long stop is a timeframe to meet all the conditions precedent to a transaction and the transaction completed. Long stop date is generally 45 days from the date of execution of the deal and can be extended by mutual consent of both parties.
The financial daily mentioned that a meeting will be held on Monday to review the progress of Air India’s disinvestment after which clarity may come about handing over Air India to Tata and the long stop date. The meeting will be attended by officials from the Department of Investment and Public Asset Management (DIPAM) and the Ministry of Civil Aviation (MoCA). After clarity on the long stop date, the financial statements will be prepared in agreement with Tata on that date.
The handover of Air India to Tata Sons also requires approvals from global competition regulators before closing the transaction, the daily mentioned citing the official. On December 20, India’s competition regulator, Competition Commission of India approved the deal.
As of August 31, Air India had total dues of Rs 61,562 crore. About 75 per cent of this debt or Rs 46,262 crore will be transferred to a special purpose vehicle AIAHL before handing over the ailing carrier airline to Tata Group.
The deal does not include non-core assets such as land, buildings, etc., which are valued at around Rs 14,718 crore.
Earlier, reports surfaced that Tata Sons shortlisted an expat chief executive officer (CEO) to head Air India. More importantly, the new Air India boss would reportedly finalise the management team for the airline.
