Air India Disinvestment: Stake sale alert! Deadline extended; bidding to be done on enterprise value not equity - All you need to know

The Centre on Thursday extended the deadline for submitting the bids to buy 100 per cent stake in national carrier Air India to December 14 from October 30. According to Union Civil Aviation Minister Hardeep Singh Puri, "The delay took place because of Covid related lockdown."

On its part, the Department of Investment and Public Asset Management (DIPAM) issued the ninth corrigendum to the global invitation for Expression of Interest (EoI) for the proposed divestment of Air India.

The bidding is expected to be opened on 28 December 2020.

Further, Civil Aviation Minister Hardeep Singh Puri said bidding for Air India would be done on the basis of its enterprise value instead of equity value. "We have decided to ask for bids for Air India on enterprise value," Puri said at a press conference.

Enterprise value of a company includes the equity value, debt as well as cash with the company. Equity value measures the value of a company's shares.

Aviation Secretary Pradeep Singh Kharola said at the conference, "The bid will be on the enterprise value... In this enterprise value also, a ratio has been earmarked between how much he (bidder) can take as debt and how much he has to give as cash."

It has been decided that whatever enterprise value the bidder quotes, 15 per cent of that has to be given in cash to the government and remaining 85 per cent has to be taken as debt along with Air India, Kharola explained.

The debt of Air India as on March 31, 2019 was Rs 58,255 crore. Later in 2019, Rs 29,464 crore of this debt was transferred from Air India to a government-owned special purpose vehicle called Air India Assets Holding Company Limited (AIAHL).

After its unsuccessful attempt to sell Air India in 2018, the government in January this year restarted the divestment process and invited bids for selling 100 per cent of its equity in the state-owned airline, including Air India's 100 per cent shareholding in Air India Express Ltd and 50 per cent in Air India SATS Airport Services Private Ltd.