BAA ‘fresh row with bondholders’
12.04.09
BAA faces a fresh showdown with its lenders and bondholders over the Government's plans to change the way the airports group is regulated, the Telegraph reports.
The Department for Transport (DfT) is considering a ‘special administration’ regime for BAA's three regulated airports – Heathrow, Gatwick and Stansted. Such a regime, which is a feature of the power and water industries, is put in place to ensure a vital industry continues to operate even if a company fails. It has the effect of preventing lenders and bondholders exerting their usual rights to appoint an administrator and sell off assets to get their money back.
The newspaper reports that the introduction of such a regime would cause another headache for BAA. Rating agency Standard & Poor's has warned that ‘the introduction of a special administration regime may impair our ability to rate’ and last month placed BAA on a ‘negative outlook’. In a note to clients, credit analyst Alexandre de Lestrange warned that such a change would ‘require bondholders' and lenders approval’ and added: ‘This could lead to a multi-notch downgrade’.
BAA sources told the Telegraph that the proposed regime could require alterations to existing lending agreements, but stressed that it was a proposal. Under a DfT consultation period, lenders and bondholders have been asked for their views on the proposed change. All interested parties had been asked to ‘take part in the DfT consultation and let their views be known’.
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