This article is provided to FT.com readers by Debtwire—the most informed news service available for financial professionals in fixed income markets across the world. www.debtwire.com
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BAA owner Ferrovial is considering a fresh equity injection of up to EUR 1bn in the UK airports operator, three sources familiar with the matter told Debtwire. The new money will be funded with a loan to Ferrovial arranged by the Spanish construction group’s relationship banks, they added. The loan, which Ferrovial first sought without success early in the year, will be made up of several bilateral loans or placed via a club deal, they said.
”Ferrovial is constantly in conversations with financial institutions and banks with regards to loans of a bilateral, syndicated or otherwise nature, as we´ve done, much like any other company of this size/sector, which is constantly renegotiating its lines of liquidity to ensure adequate reserves of capital for all reasonable eventualities,” a Ferrovial spokesperson said. He declined to comment further.
The capital injection is most likely connected to BAA’s upcoming debt restructuring talks with lenders, the sources said. “The new money could ease the discussions with lenders,” one of the sources said.
As previously reported, BAA’s workout plan is expected to be completed by mid-summer. BAA confirmed late Tuesday in a statement it is considering a bank and bond solution which would include the migration of bond holders to a ring-fenced securitisation.
The proposed refinancing of the majority of BAA’s BAA’s GBP 4.72bn acquisition facility via a whole business securitisation (WBS) is progressing satisfactorily, a fourth source and the second source said. BAA has received soft commitments from existing banks and the deal is likely to be led by four Spanish banks, RBS and Barclays, the two same sources said.
Approximately one-third of BAA’s GBP 2bn second lien debt (priced at Libor+ 400bps) would be repaid as part of the process, the sources went on to say. In exchange for the repayment, lenders would likely allow changes to the second lien ranking and its security package, the fourth source said. The acquisition debt backed Ferrovial’s GBP 10bn takeover of BAA in 2006 for an enterprise value of EUR 23.6bn.
The Spanish conglomerate approached several banks in February for a EUR 1bn funding, but did not receive the responses it expected in terms of pricing and underwriting commitment, according to two of the three sources.
After those efforts failed, “Ferrovial is closing the deal via bilateral loans with relationship banks - especially those in Spain,” the first source said. “It was easier for them to chop it up and do it via bilateral transactions than have the deal underwritten by a few banks given current market conditions,” the source added.
A spokesperson for BAA declined to comment.
The second lien paper was quoted at 85-87 yesterday, while the senior debt was quoted at 96-98, a market participant said. The five-year CDS was quoted at 315bps-345bps, the market participant added.
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