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Airport Operator BAA's Debt Could Be Made 'Junk'

By: Cindy Norgte

According to reports, airport operator BAA could have their massive £10bn debt classified as 'junk' in the next couple of months if they fail to refinance it. If their debt is written off in this way, it could spell financial disaster for BAA, which counts Heathrow, Gatwick and Edinburgh Airport among its business portfolio. This is because the business currently has £5bn worth of lenders, who will be eager to recall their loans if the massive debt is made junk.

Last Month, BAA said that they had hoped to finalise their refinancing agreements by June, but the impact of global credit crunch, as well as a report by the Competition Commission into BAA's control of the three main London airports, has made refinancing much harder than they had initially thought.

The Competition Commission is due to give a report on BAA later on this month, and it is thought that they may force the operator to sell one of its airports, most likely Stansted. However, BAA is currently trying to use the revenue from all three of its London airports to help it to secure new debt refinancing packages. No lender wants to offer BAA financial help until the Competition Commission makes a decision on the fate of the company's airports.

The airport operator, who spent £4bn on the construction of Heathrow's disastrous Terminal 5, is now seeking completion of its refinancing plans "early in the third quarter of 2008." In order to get things in place as quickly as possible, a BAA spokesperson said that they were "considering a combination of bank and bond financing to maximise the chances of a successful and timely completion of the refinancing in the current challenging debt capital markets."

The airport operator was purchased in 2006 by a consortium led by Ferrovial for £16.3bn, but this amount included debts. The business currently operates London's Heathrow, Gatwick and Stansted Airports, Edinburgh Airport, Glasgow Airport, Aberdeen Airport, and Southampton Airport.

Article Source: http://www.articlesnatch.com

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Cindy Norgte is a former glamour model with experience as a heathrow model.

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