Heathrow and Gatwick Operator BAA Delays Refinancing
24th April 2008
According to reports, the global credit crunch has caused airport operator BAA to delay the planned refinancing of their massive debt. Just last month, the business said that it hoped to have refinancing in place by June, although this is no longer likely.
BAA was purchased in 2006 by a consortium led by the Spanish group Ferrovial for £16.3bn, which included debts. The business operates London’s Heathrow, Gatwick and Stansted Airports, as well as Edinburgh Airport, Glasgow Airport and Aberdeen Airport in Scotland, Southampton Airport in the South of England, and Naples Airport in Italy.
The airport operator, which recently unveiled the catastrophic £4bn Terminal 5 at Heathrow, are now thought to be seeking completion of their refinancing deals “early in the third quarter of 2008.” A BAA spokesperson said that the company were hoping to use a variety of different sources in order to refinance their business as quickly as possible. The spokesperson said that the business was “considering a combination of bank and bond financing to maximise the chances of a successful and timely completion of the refinancing in the current challenging debt capital markets.”
BAA had initially wanted to seek long-term bond financing for Heathrow, Gatwick and Stansted, which are the regulated airports in its portfolio. The airport operator also hoped that its four unregulated UK airports, which are Glasgow, Edinburgh, Aberdeen and Southampton, would be refinanced via bank debt. However, thanks to the credit crunch, seeking finance is proving to be trickier than they initially hoped.
If BAA fail to refinance their huge £10bn debt soon, there is a chance that it could be reclassified as ‘junk’ in the next two months. If this occurs, it could potentially trigger a major financial meltdown for the airport business, as their £5bn worth of lenders will be clamouring to recall their loans.
Source:
Daily Telegraph
The Times