Tata could request protection clause in Air India deal

With the seizure of Air India (AI, Mumbai Int’l) planes remaining a threat to Cairn Energy and Devas Multimedia, Tata Sons – one of the last two bidders for the heavily indebted national carrier – could ask the Indian government for a compensation clause to be included in the privatization deal to protect against unexpected claims, “senior officials close to development” told The Economic Times.

Such a clause in the final contract would protect the conglomerate from recent claims filed by the two aggrieved companies in recent months, seeking the assets of Air India – and therefore the government – abroad.

Since compensation may be limited in time and value, the group may also seek a state guarantee against any pre-acquisition claims the airline faces, the sources said.

Tata Sons became Air India’s preferred bidder, ahead of SpiceJet CEO Ajay Singh, as he allegedly offered a higher price in the preliminary tender. An anonymous official told the Financial Daily that the group had assembled a team of mergers and acquisitions specialists from affiliated entities such as Vistara, AirAsia India, Tata Steel and Indian Hotels Company to examine the smallest details and finalize the transaction.

“It’s a huge and complicated exercise. But we have already done complicated mergers and acquisitions with the government […] which gives us the knowledge and understanding to handle such issues, ”said a Tata official giving the examples of telecommunications company VSNL, now known as Tata Communications, and Bhushan Steel, now Tata Steel.

Tata Sons and Air India were not immediately available for comment.

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