BAA reveals details of £4.5bn bond deal
14.07.08
BAA has revealled details of the £4.5 billion of new bonds it hopes will be accepted by bondholders in place of their existing unsecured holdings, the Times reports. The new bonds are backed by income from the three London airports and Heathrow Express train link.
The airports operator has about £12 billion in debts after it was taken over by Ferrovial two years ago. The Spanish infrastructure group has been trying to renegotiate more favourable interest payments on £10 billion of that debt for the last year.
BAA is keen to convince bondholders to agree to its plans as a recent £7.65 billion finance package from Citigroup, Royal Bank of Scotland, HSBC and Santander for airport redevelopment depends on the bond restructuring going ahead.
The Times reports tat BAA has sweetened the deal for bondholders by increasing rates on the coupons by up to 0.7 percentage points. It is also offering a one-off payment equal to 0.25 percentage points to those who vote in favour of the deal before July 29. It is expected that the bond ratings will rise as a result of the new terms.
BAA needs 75% of bondholders in each of its nine tranches of bonds to agree to the deal so it can go ahead. If enough bondholders agree, the newspaper reports that the new bonds will be issued on August 14.
While switching bondholders to the new deal will cost the operator money, the new secured structure is likely to make it easier to raise finance in the future. The six members of a special committee set up by the Association of British Insurers to look at the proposals said that they would be recommending that ABI members vote in favour.
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