Ferrovial to Sell 10% Stake in Heathrow-Owner BAA to Cut Debt
Ferrovial Aims to Sell 10% Stake in Heathrow-Owner BAA
Suzanne Plunkett/Bloomberg
Ferrovial SA , the Spanish builder that bought BAA Ltd. for 10 billion pounds ($16 billion) in 2006, plans to sell a 10 percent stake in the owner of London’s Heathrow airport to pay down debt and fund other projects.
Ferrovial SA , the Spanish builder that bought BAA Ltd. for 10 billion pounds ($16 billion) in 2006, plans to sell a 10 percent stake in the owner of London’s Heathrow airport to pay down debt and fund other projects. Photographer: Suzanne Plunkett/Bloomberg
Ferrovial SA, the Spanish builder that bought BAA Ltd. for 10 billion pounds ($16 billion) in 2006, plans to sell a 10 percent stake in the owner of London’s Heathrow airport to pay down debt and fund other projects.
Ferrovial, which added BAA as part of a plan to expand beyond construction, rose as much as 4.9 percent in Madrid trading after saying it would reduce its 55.9 percent stake in the U.K. business while remaining the largest shareholder.
The stake in BAA, which owns six U.K. airports including Heathrow, the busiest in Europe, may be worth 400 million euros ($558 million), said Robert Crimes, an analyst at Credit Suisse in London, who expects bidders to include infrastructure funds. Madrid-based Ferrovial is disposing of stakes in assets to pare net debt of 24 billion euros, and this month agreed to sell 10 percent of a Toronto toll road for C$894 million ($869 million).
“Heathrow is one of the best infrastructure assets in the world and its resilience has been proven by its performance in the current economic circumstances,” Ferrovial Chief Executive Officer Inigo Meiras said in a statement. The sale is part of a strategy of establishing a market value for its assets, he said.
Ferrovial was trading 2.7 percent higher at 8.07 euros as of 3:04 p.m. in the Spanish capital. The stock has declined 1.8 percent so far this year, giving the company a market value of 5.93 billion euros.
Record Total
Passenger numbers at Heathrow rose 7.6 percent to 6.2 million last month, making it the busiest September ever. The airport ranks No. 2 worldwide, behind only Atlanta Hartsfield.
BAA last year sold London Gatwick airport to New York-based Global Infrastructure Partners for 1.5 billion pounds under pressure from the U.K. Competition Commission, which ordered a breakup of the business. London Stansted and either Glasgow or Edinburgh airport may also have to be sold as part of the same process. BAA is also selling a terminal in Naples, Italy.
Ferrovial borrowed 9 billion pounds from banks to finance the takeover of BAA. It retired the bulk of the most expensive junior-ranking debt, for 1.57 billion pounds, last month using proceeds from a bond sale and a credit line.
Attractive Asset
Credit Suisse’s Crimes estimates that the internal rate of return at BAA is about 11 percent, making it an attractive asset for infrastructure funds compared with U.K. government debt, on which a 20-year bond currently yields 3.9 percent.
Former Ferrovial Chief Executive Officer Joaquin Ayuso said in February last year that the company might sell a stake in BAA if it received a “reasonable offer” and that he wanted the group to carry less debt. Ayuso was replaced as chief by Meiras, the head of the company’s airports division, two months later.
Ferrovial’s co-investors in BAA are Britannia Airport Partners LP, which is run by Caisse de Depot et Placement du Quebec, Canada’s biggest pension-fund manager, with a 26.5 percent stake and GIC Special Investments Pte Ltd., the Singapore government’s sovereign wealth fund, with 17.6 percent.
BAA said today in a statement that Ferrovial had supported it through “challenging times” and was committed for the long term, while saying it would welcome a “new” shareholder.
To contact the reporters on this story: Steven Rothwell in London at srothwell@bloomberg.net; Paul Tobin in Madrid at ptobin@bloomberg.net
To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net
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