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July 5, 2001
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Money > Business Headlines > Report July 5, 2001 |
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CCD gives A-I the green signal, grounds IA plansBS Economy Bureau The government on Wednesday cleared the shareholders' agreement and share-purchase agreement for Air-India, but deferred indefinitely the divestment in Indian Airlines. Under the terms of agreements for Air-India, which have been "frozen," the chairman and the managing director will both be nominees of the strategic partner. Out of the 12 board members, five will be nominated by the strategic partner including the chairman and the managing director, three will be government nominees and the rest will be professionals. The latter, in all likelihood, will be nominees of the strategic partners, since they will have a majority on the board. At least two-thirds of the board will consist of Indian nationals, including the chairman and managing director. Following the cloud over the issue of one of its directors also being a director in a Tata company, it was decided that in addition to Morgan Stanley, Air-India's valuation will also be done by two more merchant bankers. It was also resolved that post-divestment, Air-India will be given ATF at the same rate as other international airlines. An employee stock options plan has also been finalised, giving A-I staff shares of Rs 10 face value at par. "On an average, each employee will get 850 shares and the lock-in period will be one year as per Sebi guidelines. The actual transfer of shares to the employees will however be done only after the sale to the strategic partner is complete," said divestment minister Arun Shourie. Political differences in the CCD, however, led to the deferment of the divestment in Indian Airlines. When the process will be resumed is not known. A senior minister told Business Standard that guidelines for divestment will be so framed as to debar "certain parties" from participating. The minister made it virtually clear that the government had decided to keep the Hindujas and Videocon out of the A-I and IA fray and would frame policies to justify this. The CCD and CCS will meet on July 6 to discuss the matter again. Fears were also expressed on the first right of refusal clause in the shareholders' agreement that has been granted to Air-India for a period of seven years. This is seen as benefiting Air-India and enhancing the profitability of the airline once it is divested. The move could however, be the last nail in the Indian Airlines coffin, because it earns a huge proportion of its revenues by flying on international routes. The CCD also cleared the shareholders agreement for Computer Maintenance Corporation and Hindustan Teleprinters Limited. Binani Industries has been allowed to bid for Hindustan Zinc Limited. The issue had been held up on monopoly grounds. Powered by YOU MAY ALSO WANT TO READ:
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