BAA, the Spanish-owned firm behind Britain’s ‘best-loved’ airports, announced proudly this afternoon that it has managed to persuade a large of consortium banks to back its £13.3bn refinancing plan. As part of this, it will set aside a £3bn pot for immediate investment in its seven UK airports, most of which will be directed at Heathrow, Gatwick and Stansted. Although this could depend on whether the Competition Commission forces it to sell one of them…
Given the much-documented problems at its UK airports, and the ongoing troubles in the credit markets, there had been some concerns that BAA wouldn’t be able to get the deal away. But clearly these banks are counting on the fact that we’re not going to stop flying. ‘This is the largest financing of its kind ever completed, and the fact that a landmark transaction of this size and complexity has been completed in challenging credit markets is a testament to the strength of the business and the confidence of the financial markets in BAA and its airports,’ crowed BAA CEO Colin Matthews today.
Under the terms of the new debt package, BAA has split its finances in two: about £12bn (including £4.5bn of existing bonds) has been secured against the Designated Airports (Heathrow, Gatwick and Stansted), while the rest has been secured against the Non-Designated Airports (Edinburgh, Glasgow, Aberdeen and Southampton). The deal allows BAA to pay off the acquisition facilities used by Spanish group Ferrovial to buy it in 2006, and also improve its credit rating (thus reducing its interest payments). So for the first time in a while, its long-term financial future looks pretty secure.
However, the same can’t be said for its operational future: its next obstacle is likely to be the Competition Commission, which is reportedly set to recommend this week that BAA sells off either Gatwick or Stansted (and possibly both), plus one of its Scottish airports. BAA will hope that the promise of further investment might dissuade the Commission for the time being – but in practice it might just prove a good way of boosting the price tag. Apparently buyers are already queuing up to express interest in the different sites, even though they’re not actually for sale yet – so if nothing else BAA should make some decent money from any sale...
In today's bulletin:
Tenants super for gloomy house sellers
US economist: we're going to see a whopper!
BAA secures its future - for now
Editor's blog: I Don't Know How He Does It, Part Three
PRs to be thrown into the Lake of Fire?