Times says ‘BAA in grave danger’
10.05.08
BAA is in 'grave danger of having its debt called in', the Times reports. Attempts to refinance the £10bn of debt taken on by Ferrovial when it bought the UK airports operator two years ago have so far failed, putting severe pressure on the company's finances.
The Times says that the £400m cash injection from Ferrovial and other shareholders announced yesterday 'will buy BAA a little time but if it cannot refinance in the next 2 months, the company’s credit rating will almost certainly be moved to junk status. When that happens half the company’s bondholders, who own about £3bn of debt, will be able to call in their money,' it reports.
The newspaper says that if the debt is called in, it would probably trigger a fire sale of BAA assets to fend off bankruptcy, adding, if 'BAA runs out of cash, it could be forced to shut airports'. This is pushing the threat a little far, we think. BAA's shareholders are well funded and are not likely to let prized assets be sold off cheaply. But it will certainly be an interesting few months for the UK's biggest airports operator.
The Times also suggests that BAA is in the process of organising the sale of Gatwick and Glasgow airports, 'which would raise about £2.5 billion.' However, the article does not quote any sources to back the claims.
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