The government has initiated the second step for disinvestment of Pawan Hans Limited (PHL), inviting expression of interest from the prospective bidders to sell its stake in the helicopter PSU.
The Centre is planning to exit Pawan Hans by selling its 51 per cent stake along with the transfer of management control. The Expression of Interest (EOI) window is open till August 22.
Both the shareholders of PHL — the government and the ONGC will indemnify the contingent liabilities to the extent of over Rs 500 crore for the potential buyers.
The renewed process had in fact gathered momentum with the issuance of PIM (preliminary information memorandum) on July 11, 2019.
Now, the government proposes to disinvest its entire equity shareholding of 51 per cent in the PHL by way of strategic disinvestment to investor(s) along with transfer of management control.
The government has appointed SBI Capital Markets Limited (SBICAP) as its advisor to manage the strategic disinvestment process, DIPAM (Department of Investment and Public Asset Management) said in a notice.
Shortlisted Bidders (SBs) shall be provided with Request for Proposal in Stage II and would be required to submit their Financial Bid, SBI Caps said. After an unsuccessful attempt for sale of Pawan Hans earlier this year, the government provided indemnity to the potential buyers against contingent liability of over Rs 500 crore in the helicopter service company.
The government had to make the bid document more attractive after discussions with investors on their concerns after the sale process of Pawan Hans failed to attract any suitor when the bidding ended on March 6.
“It has been decided to indemnify the investors of the contingent liability of Rs 577 crore which relates to disputed tax demand,” an official said.
The government holds 51 per cent stake in helicopter service provider Pawan Hans, and the remaining 49 per cent is with the Oil and Natural Gas Corporation (ONGC). A total of 100 per cent stake in Pawan Hans, which has a fleet of 46 choppers, has been put on the block.
Though the renewed process has just started, officials said as per estimates of advisers to the deal, a 100 per cent stake sale could fetch about Rs 1,100-Rs 1,200 crore to the government.
This disinvestment process is to be implemented through open competitive bidding route. Accordingly, Expression of Interest (EOI) is invited to be submitted from interested bidders on or before August 22, 2019.
Since the PIM was out earlier, the prospective bidders have sought clarity on Contingent Liabilities of PHL where they want to know: “Whereas it is clearly laid out that the Centre will indemnify the successful bidder for 51 per cent of the contingent liability – Rs 577 crore, there is no clarity for the remaining 49 per cent. Clarity on the balance 49 per cent will have a direct impact on the bidding price and hence some clarity is required on the same.
It is expected that ONGC will provide the balance 49 per cent cover as they are obliged to sell at same terms as the government. SBI Caps has responded to that saying ‘It is clarified that ONGC on its board resolution dated July 26, 2019 has accorded to indemnify the balance 49 per cent (to the extent of its shareholding) of the contingent liability as identified in the PIM’.”
Pawan Hans Ltd. is a Mini Ratna-I category Public Sector Undertaking under the Ministry of Civil Aviation (MoCA) and provides helicopter services for offshore operations, inter-island transportation, connecting inaccessible areas, rescue work and tourism.