BAA: Significant progress in subordinated debt refinancing

Tuesday 24, August 2010


BAA: Significant progress in subordinated debt refinancing


British Airport Authority (BAA) has completed a £625 million, four-year 'Class B' bank junior debt facility, marking significant progress towards a refinancing of the group's subordinated debt of £1.57 billion.


BAA intends to prepay up to £1.1bn of the £1.57bn subordinated debt facility in September from a combination of proceeds from the new Class B facility, drawings under revolving credit facilities and proceeds from the sale of its stake in the airport property partnership APP in June.


This will enable BAA to rebalance its blend of debt at senior, junior and subordinated levels whilst leaving financial ratios comfortably within required levels.


BAA had initially targeted a loan of only £500m but increased the size to meet significant excess demand from new and existing relationship banks.  The lenders under the facility are a group of eight major international banks. The new facility has a margin of 3.25% for the first three years, rising to 3.75% in the final year.


BAA has received consent from its banks to use the proceeds of the new Class B loan, together with up to £375m of drawings from its revolving credit facilities, to prepay the subordinated debt facility.


BAA intends to refinance the remainder of the subordinated facility from a variety of sources. These may include proceeds of further non-core asset disposals, bank and/or institutional loans and capital markets issuance. Further details will be provided in due course.





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