Airport operator BAA moved a step closer to refinancing its debt by agreeing new lending facilities with a group of eight banks and said it would pay a large chunk of its borrowings next month.
BAA said it completed a £625m four-year debt facility, marking significant progress towards refinancing its subordinated debt of £1.57bn.
The company, operator of London's Heathrow and Stansted airports, said the refinancing was greater than the £500m initially targeted due to excess demand from banks.
BAA, which is owned by Spanish group Ferrovial, said it intends to prepay up to £1.1bn of the debt facility next month, helped by 375 million pounds from its revolving credit facilities and proceeds from the sale of its stake in airport property partnership APP.
The group, which also runs Glasgow, Southampton, Edinburgh and Aberdeen airports, plans to refinance the remainder of the debt from a variety of sources, including asset disposals, loans and capital markets issues.
The new facility has a margin of 3.25 per cent for the first three years, rising to 3.75 per cent in the final year, it said.
Earlier this week, BAA and the Unite union reached a pay deal to prevent strikes by ground staff at major UK airports this month.