BAA sells £935 million in debt, London airports get £500 million equity boost

BAA last week placed a £235 million ($391 million) Sterling index-linked bond with a 2039 maturity and a fixed real annual interest coupon of 3.334%. The issue follows placement in late November of a £700 million, 17-year bond issue undertaken by the company. Proceeds from the bond issues will be used to refinance existing debt and will lengthen the airport operator's debt maturity profile.

Also in November, BAA said it would inject £500 million of equity into its London airports group to lower debt, strengthen medium-term finances and facilitate access to capital bond markets. "It's not going towards a particular project," spokesperson Malcolm Robertson told ATW's Airports Today. "It's basically to pay some of our debt and it helps our access to the bond market. That in itself adds up to a much stronger BAA able to invest in the airport over the long term."

The financial boost included £260 million of equity in November and £240 million due in January. Funds are from BAA's three controlling shareholders as well as BAA Airports Ltd. and FGP Topco Ltd., the ultimate holding company of BAA.

In October, BAA agreed to sell London Gatwick to Global Infrastructure Partners for £1.5 billion. BAA was ordered by the UK Competition Commission to sell Gatwick, Stansted and either Glasgow International or Edinburgh but is appealing the ruling. "We won't know the outcome until January, and at that point we will know what, if any, other airport we are required to sell," Robertson said.