The Centre is likely to announce the winning bid for national carrier Air India by the middle of the next month, a senior government official said.
The financial bids submitted by Tata Sons through its subsidiary Talace Pvt Ltd and a consortium led by SpiceJet chairman Ajay Singh is likely to be opened on Wednesday. The Tatas are favoured to take over Air India.
An inter-ministerial group would soon meet to take a call on the final reserve price, the officials said. The government had appointed RBSA Advisors to recommend the reserve price.
The financial bids will be evaluated against the undisclosed reserve price. The bid will be initially examined by the transaction advisor before the recommendation is sent to the cabinet for its approval.
Under the current terms of the sale, the bidders will quote an enterprise value (EV) which is their estimate of the combined value of AI’s equity and debt.
The winning bid will be decided on the basis of the highest EV value. At least 15 per cent of the value need to be paid in cash while the rest can be taken on as debt.
The Centre is offering to sell its 100 per cent stake in Air India and Air India Express and its 50 per cent stake in Air India SATS Airport Services Private Ltd.
The state is also likely to offer indemnity to successful bidders from lawsuits filed by foreign companies such as Cairn against AI to recover arbitration awards from the Indian government. Air India is contesting these claims.
The stake sale process, which began in January 2020, faced delays because of the pandemic. In April 2021, the government asked potential bidders to put in financial bids for the carrier..
The successful bidder will bag control of 4,400 domestic and 1,800 international landing and parking slots, as well as 900 slots at airports overseas.
With previous attempts since 2017 to sell the carrier failing to generate any significant interest, the government in October last year sweetened the clause on the transfer of Air India's huge debt.
Instead of taking a fixed debt of Rs 23,000 crore, the bidders were given the flexibility to decide on the amount of debt they want to absorb.