BAA working on £1bn regional airports fundraising
24.02.08
BAA is trying to ease its debt and cash problems by raising a £1bn loan secured against its regional airports. According to the Times, BAA has appointed Macquarie, the Australian investment bank, to advise on a £1 billion fundraising involving its airports outside London - Southampton, Glasgow, Edinburgh and Aberdeen.
BAA was taken off the stock market last year by Ferrovial, the Spanish infra-structure group. It led a consortium of investors that paid £10.3bn for the group, which also owns Heathrow, Gatwick and Stansted airports. The consortium planned to refinance the £8bn in loans raised for the purchase, along with almost £5bn of debt on BAA's books, last year, but were caught out by a regulatory review of airport pricing and the credit crunch. Some analysts believe interest bills and investment plans could see BAA run out of cash halfway through next year.
Ferrovial had planned a refinancing of the two debt streams using a securitised bond issue backed by the revenues from the 3 London bases, with a separate loan raised against the 4 regional airports. However, the credit crunch and the threat of lower than expected price rises at BAA's regulated London airports has halted the bond issue. However, the newspaper reports that it is now pushing ahead with the regional deal.
Details of the loan talks were revealed by Project Finance International, an influential financial magazine. It said the money raised would be used to ease the company’s finances, and to help raise the market rating of its senior debt to investment grade in order to keep interest payments down.
The CAA will release its final decision on BAA’s prices for the next five years at Heathrow and Gatwick early next month. Analysts then expect BAA to attempt the main refinancing, and do not rule out a sale of one or more of its UK airports to raise cash, although BAA has said previously that it does not plan to do this.
BAA declined to comment on this story.
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