The EOI also stipulates a minimum stake requirement in the consortium and company
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Bidders for the national carrier, Air India will need to have a minimum net worth of Rs 3,500 crore -- whether as sole bidder or a consortium.
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The government on Monday kicked off the strategic disinvestment of Air India with Ernst & Young, transaction advisor issuing an expression of interest by the Government of India (GOI) for advising and managing the proposed strategic disinvestment of Air India Limited (AI) by way of transfer of management control and sale of 100 percent equity share capital of AI held by GOI.
AI inter alia holds 100 percent equity share capital of Air India Express Limited ("AIXL") and 50 percent equity share capital of Air India SATS Airport Services Private Limited ("AISATS") (together with AI and AIXL referred to as "Companies").
The Expression Of Interest (EOI) prescribes the financial capability conditions for the interested bidders. For submitting the EOI and for being considered for subsequent qualification for Stage II of the Proposed Transaction, the IB (whether a sole bidder or a Consortium) will have to satisfy the criteria of having a minimum net worth of Rs 35,000 million or Rs 3,500 crore.
Net worth means the aggregate value of the paid-up equity share capital and all reserves created out of the profits and securities premium account, after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the audited balance sheet.
The EOI also stipulates a minimum stake requirement in the consortium and company. Each member of the Consortium shall hold at least 10 percent interest in the Consortium and at least 10 percent equity share capital of the company (special purpose vehicle) to be promoted by the members of the Consortium for acquiring the GOI stake being disinvested in Air India.
The lead Member shall hold at least 26 percent interest in the Consortium and at least 26 percent of the equity share capital of the company (special purpose vehicle) to be promoted by the members of the Consortium for acquiring the GOI stake being disinvested in Air India.
The net worth of each participating member (on their own or through its Affiliate) should be equal to or more than 10 percent of the Net Worth/ACI requirement for the Consortium (i.e. 10 percent of INR 35,000 million). However, if the member of the Consortium is a Scheduled Airline Operator in India, the condition to meet minimum share of Net Worth requirement shall not apply to such member provided interest (in Consortium) and equity shareholding of such member in the company (special purpose vehicle promoted by the members of the Consortium for acquiring the Company) is restricted to maximum of 51 percent.
Where a sole bidder or a Consortium has submitted the EOI, it is expected that there shall not be any changes in the members of the Consortium or sole bidder will not form a Consortium except in specific conditions.
Any change prior to the EOI Deadline is permissible by withdrawing the EOI and submitting a fresh EOI before the EOI Deadline. However, no change in the composition of Consortium will be permitted after the EOI deadline till the shortlisting of the Interested Bidders (IBs).
If after shortlisting of IBs, a Consortium bidder desires a change in the Consortium or a sole bidder desires to form a Consortium by inducting new members, it shall have to apply for approval for such change to the TA no later than 21 days from the date of issue of the Request For Proposal (RFP). Endeavour shall be made to provide approval or disapproval for such a change no later than 21 days from the date of receipt of such application by the TA.
The EOI has also laid down the lock-in provisions applicable for the proposed transaction. For a period of one year from the date of the closing of the Proposed Transaction, the Confirmed Selected Bidder (and/or the special purpose vehicle in case investment in AI is made through a special purpose vehicle) shall not, directly or indirectly, transfer any equity securities of AI held by it, including the legal or beneficial ownership thereof with or without any of its rights or obligations under the definitive documents, to any person.
The Confirmed Selected Bidder shall not, directly or indirectly, transfer any equity securities of the special purpose vehicle (in case investment in AI is made through a special purpose vehicle) held by them, including the legal or beneficial ownership thereof with or without any of its rights or obligations under the definitive documents, to any person.
AI shall not, directly or indirectly, transfer any equity securities of AIXL and AI-SATS held by it, including the legal or beneficial ownership thereof with or without any of its rights or obligations under the definitive documents, to any person.
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