New Delhi, March 26 : The government will soon start scrutinising the security-related aspects of disinvestment in Air India and Indian Airlines.While the broad security parameters for divestment in the aviation sector were laid down earlier, now the government will go into the specifics, department of disinvestment (DoD) sources said.At present, the Hindujas and Tata-Singapore Airlines (Tata-SIA) want to take over AI, whereas the Hindujas and Videocon are in the race for IA. Since selling either of the public sector airlines to the Hindujas is likely to open a floodgate of criticism, there have been reports that the government might go in for rebidding.
While sources do not deny rebidding, they said that right now, there is no such "formal proposal." In any case, they pointed out, there is nothing improper if a PSU is sold to the single bidder if his offer is more than the reserved price.
Technical bids for the two airlines were received last month. The global advisers engaged for the two airlines have prepared information memoranda in consultation with the managements of the two PSUs. For AI, global advisors are JM Morgan Stanley and for IA, ANZ Grindlays. The information memoranda would be given to the two bidders who would then enter into a confidentiality agreement with the government. The global advisors are also preparing the share purchase agreement and the shareholders' agreement with the help of the legal advisers. This will be followed by due diligence of the two airlines on the block. The bidders will also hold discussions with the advisers, the government and the managements of the two airlines.
The valuation of the two airlines will begin concurrently in accordance with the accepted national and international practices, sources said. The share purchase agreement and the shareholders' agreement will be vetted by the ministry of law. This will be followed by the call for final bids.
After examination, analysis and evaluation, the recommendations of the inter-ministerial group will be placed before the cabinet committee on disinvestment for a final decision. This will be followed by the signing of the agreements and inflow of money.
Though the government wanted to sell the two airlines in this fiscal, this will be possible only in the next fiscal, sources said. They added that the final transaction is unlikely to take place before the middle of this year.
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
