Ferrovial returns to BAA talks

City A.M. Reporter
SPAIN’S Ferrovial is in talks with investors to sell 10 per cent of UK airport operator BAA, which runs London’s Heathrow, by June, its chief executive said, in a move to halve a €24.5bn (£20.5bn) debt pile.

Ferrovial will seek offers for the stake, estimated last year to be worth about €200m, in the last week of January, with the aim of clinching a deal in the first half.

“(Talks) are mainly with infrastructure funds, sovereign wealth funds and big investors like pension funds, mainly from the US and Britain,” chief executive Inigo Meiras said.

Ferrovial owns 55.9 per cent of BAA, the operator of airports including Heathrow and Stansted. By dropping its holding below 50 per cent, the Spanish company will no longer need to consolidate BAA debt on its balance sheet.

It sold 10 per cent of its lucrative Canadian 407 Express Toll Route to the Canadian Pension Plan Investment Board for C$894m (£573m) last year and Meiras said it wants to continue selling mature infrastructure assets in 2011.

The BAA stake may prove trickier to sell after BAA said this week it expects to take a hit of around £24m to account for the costs of last month’s big freeze, which closed runways and dented passenger numbers in the week before Christmas.

“Bad weather is part of systemic risk in the airport business and this has obviously been factored into our valuation of the stake,” Meiras said.

Virgin Atlantic has threatened to take legal action against BAA over the closure of Heathrow last month and said it will withhold fees it pays to BAA until a probe into the disruption is complete.

Meiras said no airline had yet withheld fees to BAA because of last month’s closures.

The BAA sale plan dates back to October of last year when the company said it would go ahead some time in 2011.