No buyers for Air India may mean divestment to be put off

Agencies
September 19, 2020

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New Delhi, Sept 19: Air India is not finding any takers and the privatisation may be put off by three years, delivering a blow to the efforts to divest the national carrier.

It seems that due to the turbulence caused in the aviation sector by the Covid 19 pandemic, airlines are already struggling and in that scenario, there are no buyers for Air India. Tatas were supposedly frontrunners for the divestiture, but for some reason have backed out of the race for the moment after completing the due diligence process. The question is therefore whether the books revealed a bigger financial mess than what was anticipated.

The government has already postponed the last date for inviting bids after having said that the date would not be advanced. Civil Aviation Minister Hardeep Puri has remarked that the options on the table are either to sell the airlines or close it down. October 30th was the latest deadline for finalizing the sale of Air India, but Govt will be forced to extend that as well. The deadlines of Air India sale have been extended quite a few times in the last couple of years.

If the privatisation is put off by three years then the government will have to find a plan to keep the national carrier running for that period.

Reports suggest that the huge debt of Air India is a major reason for buyers not being extended. The government is examining how the debt exposure of the potential buyer can be reduced.

Out of Rs 60,074 crore debt of Air India, the government had already announced a reduced debt exposure of Rs 23,286 crore for the buyer. This means, that instead of Rs 60,074 crore debt, the new buyer will be needed to repay only Rs 23,286 crore of debt. The rest of the debt will be transferred to a special purpose vehicle called Air India Assets Holding Ltd.

Discussions are on to evolve a formula where the buyers can put in a bid based on the enterprise value and bids will be evaluated based on that.

However, due to the stress in the aviation sector, buyers may not interested even with reduced debt given that their core operations are pressure.

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News Network
November 19,2024

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News Network
November 26,2024

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Bengaluru: The Janata Dal (Secular) is grappling with its most tumultuous political crisis yet, with speculation rife about imminent defections among its lawmakers. This storm comes in the aftermath of party scion Nikhil Kumaraswamy's humiliating defeat in the Channapatna bypoll—his third consecutive electoral loss after setbacks in Mandya (2019) and Ramanagara (2023). With the regional party’s Assembly tally shrinking to 18 from 19, questions are being raised about its survival.

The murmurs of rebellion were amplified on Monday when Health Minister Dinesh Gundu Rao and Congress MLA CP Yogeshwar openly hinted at possible desertions within the JD(S) ranks. Yogeshwar, newly elected from Channapatna, declared he could orchestrate a migration of JD(S) MLAs to Congress. “I’ll meet them at the Belagavi session. Within a month, they’ll be in Congress,” he confidently stated during a televised interview. Yogeshwar has a history of engineering defections, having played a pivotal role in the collapse of the JD(S)-Congress coalition government in 2019 during his stint with the BJP.

Dinesh Gundu Rao, not mincing words, slammed the JD(S) leadership for fostering "self-serving politics," criticizing the HD Deve Gowda family for failing to nurture party talent. “There’s no trust. Their MLAs will seek survival—either in BJP or Congress,” he remarked.

Meanwhile, the expelled JD(S) state president CM Ibrahim added fuel to the fire by claiming that 12-13 MLAs are "disillusioned" with the current leadership. Speculations around senior JD(S) leader GT Deve Gowda joining Congress have also intensified. DK Shivakumar, Karnataka’s Deputy CM and Congress president, described GT Deve Gowda as a “valuable leader” who might be frustrated with the party’s internal dynamics.

While Congress leaders seem eager to poach JD(S) legislators, the BJP is not far behind in targeting the floundering party. The situation signals a decisive moment for the JD(S), as its survival now hinges on how it manages this brewing storm of discontent.

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News Network
November 21,2024

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Shares of Adani Group companies lost about $28 billion in market value in morning trade on Thursday after US prosecutors charged the billionaire chairman of the Indian conglomerate in an alleged bribery and fraud scheme.

Gautam Adani's flagship company Adani Enterprises tumbled 23 per cent, while Adani Ports, Adani Total Gas, Adani Green, Adani Power, Adani Wilmar and Adani Energy Solutions, ACC , Ambuja Cements and NDTV fell between 20 per cent and 90 per cent.

Adani group's 10 listed stocks had a total market capitalisation of about $141 billion at 0534 GMT, compared to $169.08 billion on Tuesday.

US authorities said Adani and seven other defendants, including his nephew Sagar Adani, agreed to pay about $265 million in bribes to Indian government officials to obtain contracts expected to yield $2 billion of profit over 20 years, and develop India's largest solar power plant project.

Adani Green in a statement on Thursday said the US Justice Department had issued a criminal indictment against board members Gautam Adani and Sagar Adani and the Securities and Exchange Commission had issued a civil complaint against them.

The US Justice Department also included Adani Green board member Vneet Jaain in the criminal indictment, it said.

Adani Green's units had decided not to proceed with the proposed US dollar denominated bond offerings due to developments, it added.

"Investors will shy away from Adani Group stocks ... and that's what this sharp selling is signifying," said Saurabh Jain, assistant vice president of retail equities research at SMC Global Securities.

"This could hurt the credibility of the group and maybe borrowing costs will rise," he said.

The indictment comes nearly two years after US shortseller Hindenburg Research alleged that Adani had improperly used tax havens and was involved in stock manipulation, allegations the conglomerate denied.

Also in early Asian trading on Thursday, Adani dollar bonds slumped, with prices down 3c-5c on bonds for Adani Ports and Special Economic Zone. The falls were the largest since the Adani Group came under a short-seller attack in February 2023.

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