Tatas now have to accept the LoI, post which the Share Purchase Agreement will be signed
The government on Monday issued a letter of intent (LoI) confirming the sale of its 100% stake in loss-making Air India to Tata Group for ₹18,000 crore, a senior official said.
Last week, the government had accepted an offer by Talace Pvt Ltd, a unit of the holding company of salt-to-software conglomerate, to pay ₹2,700 crore in cash and takeover ₹15,300 crore of the airline’s debt.
Subsequent to that, an LoI has now been issued to Tata confirming the government’s willingness to sell its 100% stake in the airline.
"Letter of Intent has been issued today," DIPAM Secretary Tuhin Kanta Padney told PTI here.
Tatas now have to accept the LoI, post which the Share Purchase Agreement will be signed. Conditions precedent to the transactions would need to be satisfied by Tatas before they actually take over the operations.
"Normally within 14 days of acceptance of LOI, the SPA is signed. We expect the SPA to be signed fairly fast," he said.
Mr Pandey said the deal is targeted to be closed by December end. After SPA is signed, the regulatory approvals will have to come in following which the handover process starts.
"When they give the Letter of Acceptance, they will give payment security of 1.5 per cent of EV value which is Rs 270 crore. Rs 270 crore will be payment security in bank guarantee which will be received by us along with acceptance letter to the LoI," Pandey added.
The cash component of the deal, he said, will come in on the day of handover which will be by December end.
The deal also includes the sale of Air India Express and ground handling arm AISATS.
Tatas beat the ₹15,100-crore offer by a consortium led by SpiceJet promoter Ajay Singh and the reserve price of ₹12,906 crore set by the government for the sale of its 100% stake in the loss-making carrier.
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