Share transfer checks on airport bidders

Joint bidders for the Mumbai and Delhi airports' mordenisation projects will have to abide by stringent restrictions in terms of share transfer if they wish to sell interests and pull out of the projects.

According to the operation management and development agreement document, a company wanting to pull out would have to offer its shares to another member in the consortium. The buying partner will have to buy the entire equity offered, and not just a part of it.

In case the equity is not purchased by the private participants, Airports Authority of India (AAI), which is the government shareholder, will have the rights to purchase the share offered. Even, AAI will have to acquire all the shares offered.

Shares can be offered to a third party only if other private companies and AAI do not acquire the equity on sale. However, a prior approval of the government is required to bring in a new partner in the venture.

Similar conditions are applicable in the case of AAI also wanting to dilute its equity in the venture.

On the tax front, the government has assured to amend conditions in the document if the companies suffer losses of more than Rs 10 crore because of the change in the tax laws.

Joint venture companies wanting to bid for the Delhi and Mumbai airports are required to have a minimum capital net worth of Rs 250 crore with an initial capital subscription of Rs 200 crore.

The government has also fixed the minimum capital investment required for the Delhi airport in the first five years at Rs 2,800 crore and for Mumbai at Rs 2,600 crore.

The bids will be awarded for an initial term of 30 years, and can be extended by another 30 years. After the expiry or termination of the lease period, AAI will take over all the assets for operating the airport and will also have the option to take over all or any of the commercial or ancillary assets.

The documents provide for a three-month transition period during which management of the airports will be transferred from AAI to JVC, and during which the government will hand"�hold the private company.

Airport operators will also have the first right of refusal to be a part of any new airports being developed within 150 km of the existing ones.