Govt, Tatas ink share purchase pact for AI sale

NEW DELHI: The government on Monday signed the share purchase agreement (SPA) with Tata Group for Air India’s divestment, sticking to the timelines that aim at transferring the airline to its new owner by the end of this fiscal. The Rs 18,000-crore deal, which will require Tatas paying Rs 2,700 crore upfront and taking over a debt of Rs 15,300 crore, will now enter its most crucial phase of meeting vital “conditions precedent” (CP). The government will retain Rs 44,679 crore of AI’s debt in an SPV which will be paid off gradually by monetising its non-aviation assets like land and buildings.
In the CP phase, clearances will be sought from regulatory agencies, including Competition Commission of India (CCI), Directorate General of Civil Aviation (DGCA), lessors, lenders and other third-party vendors. “The tricky part usually is CCI but with Tata Group’s four airlines’ combined domestic or international share being nowhere near 50%, that will not be an issue in this case. Similarly, there are doubts that the substantial ownership and effect control of AI-Tata is with Indians,” say people in the know.