Tata Group on Tuesday said it will increase its shareholding in AirAsia India as the company eyes to increase its stake in the Indian airline industry. The Indian conglomerate announced its plans to enhance its holdings in the airline from 51 per cent to 84 per cent.
The pandemic-hit airline has been struggling due to the high fuel taxes and fierce competition.
Last week, Tata Sons also put its bid for country’s struggling national carrier Air India.
At present, Tata Sons owns 51 per cent stake in the budget airline. After the transaction of 32.67 per cent equity stake, Tata’s shareholding will go upto 83.67 per cent. This means that AAIL’s stake will come down to 16.33 per cent.
In a regulatory filing made to Bursa Malaysia, AirAsia Group Berhad said the transaction via a share purchase agreement with Tata Sons was agreed by AAIL’s Board.
“TSL shall purchase 490,000,000 shares, representing 32.67 per cent of the Share Capital in AAI, from AAIL for a consideration of $ 37,660,000,” the filing said.
“The SPA may be terminated by TSL if the closing does not occur prior to the ‘Long Stop’ date of 31 March 2021, if mutually agreed in writing by all parties.”
Accordingly, 490,000,000 ordinary shares of Rs 10 each, equivalent to 32.67 per cent of the issued and outstanding shares of AirAsia India will be sold to Tata Sons for a consideration of $37.66 million.
AirAsia Group Berhad via a subsidiary, AAIL, holds 735,000,000 ordinary shares in AirAsia India of Rs 10 each.
“As part of the transaction, there will be a call option in respect of AAIL’s remaining 16.33 per cent stake in AAI, exercisable by TSL at any time after the transaction is completed,” the filing said.
“In addition, there will also be a put option exercisable by AAIL in two tranches, with the first tranche being exercisable from 1 March 2022 until 30 May 2022, and the second tranche being exercisable from 1 October 2022 to 31 December 2022.”
As per the filing, the total consideration in respect of the options granted for AAIL’s remaining 16.33 per cent “stake shall be USD18,830,000 (equivalent to approximately MYR76.29 million)”.
“The ‘Disposal Price’ was arrived at after an arm’s length negotiation between AAIL and TSL based on a willing buyer, willing seller basis, taking into account the assets and future prospects of the ongoing business.”
“The cash received as Purchase Consideration will be utilised as working capital in Q1 2021.”
Headquartered in Bengaluru, AAI flies to 19 domestic destinations across India with 33 Airbus A320 aircraft.