Ferrovial sells down stake in battered BAA for £282m

By Roger Baird
Updated: 17:39 EDT, 10 October 2011

Ferrovial has moved to cut its debts by selling a 5.9 per cent stake in BAA for £282million.

The Spanish infrastructure firm has sold its stake in the UK airports operator to US private equity group Alinda Capital Partners, which will also get a seat on the 14-man board which oversees BAA.

The deal sees Ferrovial’s stake in BAA – which owns six UK airports, including Heathrow, Stansted and Edinburgh – fall to 49.99 per cent from 55.87 per cent.

However, the agreement will see the Spanish building company cut its debt from around £17.2billion to £4.5billion when the deal is completed at the end of October.

Offload: Ferrovial has cut its stake in BAA to 49.9 per cent

This is because under international accounting rules Ferrovial, as the majority owner in BAA, had to carry all of the debt it raised to buy the UK firm for £10.3billion in 2006. But now Ferrovial owns less than 50 per cent it is no longer required to account for the debt on its own books.

This means that although each of the consortium members will still pay the same amount in interest, it will make it easier for Ferrovial to borrow to invest in other projects because its books will carry less debt.

Ferrovial added it has no plans to sell a further stake in BAA, despite saying a year ago it planned to sell up to a 10 per cent stake in the airports operator.

Since Ferrovial bought BAA five years ago it has seen its value fall to £4.8billion, due to a combination of buying at the top of the market, stuttering air traffic growth, and forced regulator sell-offs.

Just last week the Competition Commission reiterated that BAA must sell one of its Scottish airports and then Stansted.

BGC Partners senior analyst Howard Wheeldon said: ‘Ferrovial didn’t fully realise just how heavily regulated the industry was. It has paid a price for that.’