Ferrovial looks for BAA debt relief

MADRID (Reuters) - Ferrovial FER.MC plans to sell a 10 percent stake in BAA, the country's largest airport operator, in a move that would let the Spanish infrastructure group slash its net debt by more than half.

A Ryanair aircraft takes off from Stansted Airport in Essex, southern England March 19, 2009. REUTERS/Stephen Hird

Ferrovial indirectly owns 55.9 percent of BAA. Britannia Airport Partners, managed by Canada’s Caisse de depot et placement du Quebec, owns 26.5 percent and Singapore’s biggest sovereign wealth fund GIC holds 17.6 percent.

“The sale would take Ferrovial’s stake in BAA to below 50 percent and allow it to deconsolidate its subsidiary’s debt,” said Rafael Fernandez, an analyst with Caja Madrid.

Ferrovial’s net debt ballooned to 24.5 billion euros (21 billion pounds) as of June 2010, an increase of 2.2 billion from December 2009, with 15 billion of that contributed by highly geared BAA.

BAA runs airports including Heathrow in London, Stansted, Glasgow and Edinburgh. It will have to dispose of Stansted airport and one Scottish airport after a British court last week overruled a previous decision in BAA’s favour.

A spokesman for Britain’s Competition Commission said its case against BAA was not affected by the identity of its owners as it focussed on BAA’s ownership of several airports.

Ferrovial shares opened up 4 percent and at 2:17 p.m. they were up 2.7 percent to 8.07 euros, among the top gainers on both Madrid's blue-chip index .IBEX and the STOXX Europe 600 Construction & Materials index .SXOP.

Using regulated asset base calculations, three Madrid-based analysts who asked not to be named said BAA’s equity could be worth between 1 and 2 billion euros, implying Ferrovial could fetch up to 200 million euros for a 10 percent stake.


BAA saw a 5.1 percent drop in passenger numbers in the first half of 2010 to 50 million passengers which it blamed on British Airways BAY.L strikes and Iceland's volcanic eruption. As the economic recovery picked up, appetite for airport assets has returned, Caja Madrid's Fernandez said.

“The beginning of this process is within the policy framework of deriving value from Ferrovial assets, taking advantage of the financial solidity achieved at BAA,” the company said in a brief regulatory filing on Friday.

A company spokesman said Ferrovial hoped to settle a deal to sell the stake some time in 2011.

“Our aim is to continue to be a strategic partner and leading shareholder in BAA,” the spokesman said.

Ferrovial said it would use proceeds on other new infrastructure and services projects and to pay down corporate debt, as it has done with recent disposals.

The Canada Pension Plan Investment Board agreed in October to buy a 10 percent stake in Canada’s 407 Express Toll Route from Ferrovial for C$894 million. Ferrovial also agreed to sell a 65 percent interest in Naples airport to Italian infrastructure fund F2i for 150 million euros.

BAA agreed to sell Gatwick, London’s second busiest airport, to Global Infrastructure Partners for 1.5 billion pounds in October 2009. Ferrovial led the consortium that acquired BAA in 2006 in a highly leveraged 10.3 billion pounds deal.

Writing and additional reporting by Greg Roumeliotis; Editing by Greg Mahlich and Mike Nesbit