DoD shortlists 12 bidders for AI, IA sell off

DoD shortlists 12 bidders for AI, IA sell off

NEW DELHI, DEC 15: The Department of Disinvestment (DoD) has issued confidentiality agreements to 12 short-listed bidders for loss-making carriers, Air-India and Indian Airlines on Friday. The Indian Pilots' Guild (IPG) which had bid for Air India has been knocked off from the race as it did not had the requisite networth.

The release does not mention the names of shortlisted bidders. According to industry sources, however, the LN Mittal-British Airways-Qantas-Kotak Mahindra and the Tata-SIA consortia and the Hindujas are the leading bidders for AI. For domestic carrier, IA, Tatas, Hindujas and Videocon are in the fray.

These bidders are supposed to finalise and submit their initial technical proposal consisting of details of consortium, business plans, etc. Based on this information, the government would allow identified parties to proceed with detailed due diligence on the companies, by entering into the data room with obtaining necessary information from the companies.

After the bidders complete their due diligence, and the agreements are finalised in consultation with the prospective bidders, the final technical proposal and the price bids would be called, says the release.

According to official sources, the government would also discuss the civil aviation policy with the bidders. The policy is being formulated by the civil aviation ministry, as the ministry will have a bearing on the private sector.

The Government will ask the shorlisted bidders to submit technical bids by January-end to start the process of due diligence immediately thereafter, disinvestment secretary Pradip Baijal said.

Declining to give names and numbers of the remaining bidders, Baijal said "we are satisfied with the bids and there is no rethinking on government's part regarding disinvestment in the two airlines."

Final price-cum-technical bids would take another two to six months, Baijal said while exuding confidence that the transaction was likely to be completed by the first half of 2001.

Asked about the reported suggestion from AI's global advisors that fresh bids be invited, Baijal said that response had been very good and there was no such consideration.

The Government has set January 31, 2001 as the deadline for qualified bidders for Indian Airlines and Air-India to finalise and submit their initial technical proposal consisting of details of consortium and business plan.

The shortlisted bidders will also have to give the government details about any members of their consortiums who have not been announced, a senior government officials said.

This is to allow intelligence agencies to vet the names to see whether any pose a threat to India's security interests, the official, who declined to be identified, said.

The agreements precede invitations to carry out due diligence. Only when the bidders have finished looking at the airlines' books will they put a price on their offer and submit a final business plan. The government has not put a price tag on Air-India or Indian Airlines and analysts say not enough is known about the airlines to come up with a valuation estimate.

The government is selling up to 40 percent of Air India. Twenty-six per cent can be bought by a foreign airline. In case of Indian Airlines, it plans to sell 26 percent stake, but bidding is limited to local firms, non-resident Indians and foreign firms majority-owned by expatriate Indians.