February 18, 2011 / 11:36 AM / 9 years ago

PFI - Gatwick Airport owners set for refi payout

* Gatwick Airport debt being refinanced * State funds from Abu Dhabi, South Korea, California and Australia share big gains * BAA to sell more airports

By Rod Morrison

LONDON (Project Finance International) - The debt on London’s Gatwick Airport is being refinanced with the new owners who bought the asset from BAA in November 2009 being rewarded with a large refinancing gain.

The size of the new debt package will be between £1bn and £1.2bn with £850m used to repay the acquisition debt from November 2009 and the rest - between £150m to £350m - “to meet expenses and to pay its shareholders an extraordinary dividend” according to the debt rating report from Fitch.

In addition the new owners will get much bank cheaper debt, given the fact the credit markets have improved since November 2009, and much longer term debt via a bond issue.

Gatwick is raising £620m from a 4 year bank loan and between £400m to £600m via 15 and 25 year bonds which are expected to be rated BBB+. The company can raise up to £1.2bn in senior debt which equates to 70% of its regulated asset base (RAB), a key credit ratio on deals such as these. The financing is due to sign next week and is being put together by RBS, Credit Agricole, HSBC and JP Morgan.

Gatwick was bought, at the bottom of the market as airports struggled in the recession, for £1.5bn by Global Infrastructure Partners (GIP), a fund backed by Credit Suisse CSGN.VX and GE (GE.N). Shareholders who have since bought stakes in the airport include Abu Dhabi Investment Authority, National Pension Service of Korea, California state fund Calpers and Future Fund of Australia, leaving GIP with 42%.

Gatwick has been hit by the recession with traffic dropping 11% between 2007 and 2010. The decline is now stabilizing and traffic grew by 1% between November and January over the same period last year. The airport coped better with the bad weather in December than other London airports.

Yesterday BAA, which was forced to sell Gatwick due to a competition ruling, lost an appeal against having to sell more airports. It could now have to sell Stansted and either Glasgow or Edinburgh airports. BAA is owned by Spanish company Ferrrovial (FER.MC) which bought the assets in mid 2006. rod.morrison@thomsonreuters.com - www.pfie.com

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