Amid threats of seizure of Air India aircraft from the likes of Cairn Energy and Devas Multimedia, the Tata Group is mulling to ask the Narendra Modi government for inclusion of indemnity clause in the privatisation deal in order to protect itself from unexpected claims. Tata Group officials said requesting an indemnity clause to be inserted in the final transaction contract is expected given the possible risks arising from recent claims filed by Devas Multimedia and Cairn Energy, seeking to seize Air India's overseas assets, the Economic Times reported.
A contract of indemnity in favour of the acquirer may be limited in terms of time and value. Hence, the Tatas may ask for a sovereign guarantee against any pre-acquisition claims that the financially troubled airline faces, the report further adds.
The news comes as the salt-to-software conglomerate and SpiceJet CEO Ajay Singh have emerged as the two final bidders for Air India, with the former likely to seal the deal after it reportedly quoted a price higher than Singh for acquiring the Maharaja in the preliminary bidding round.
The financial daily cited an unnamed official as saying that the group has constituted a crack team comprising merger and acquisition experts from group operating entities such as Vistara, AirAsia, Tata Steel and Indian Hotels, apart from the Tata Sons to examine every minute detail of the transaction. Further, the group has engaged several top external aviation experts in the due diligence procedure.
Company officials confirmed that an indemnity clause may be inserted in the final transaction contract, given the potential risks arising from recent claims filed by Devas Multimedia and Cairn Energy—both have indicated that there could be seized government-owned properties including Air India’s overseas assets. Officials also suggested that the Tata Group wants to protect itself from “any resultant court cases” and “hidden contracts” that may crop up suddenly after the final deal is signed.
also read
- ‘Tata-Airbus plant triumph of Modi’s vision’, praises Spanish PM Sanchez, jointly inaugurates India’s first military aircraft facility
- Ratan Tata’s will: Unlimited care for pet dog Tito and share for executive assistant, says report
- Tata Group, Tata Sons and Tata Trusts: How India's salt-to-software business empire works
- Who are Noel Tata's children? Meet the next generation of Tatas who will lead the conglomerate in future
Last month, shareholders in Devas Multimedia guided the airline to recover money Devas won in arbitration awards against the Indian government, according to a US district court filing. The shareholders said Devas and its affiliates were owed more than $1.5 billion by the government.
Prior to that, oil major Cairn Energy said it would be seizing Indian government assets abroad including those belonging to Air India. Cairn Energy has already started seizing Indian government-owned assets overseas, starting with Paris. In such a scenario, Air India remains exposed to high risk.
