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BAA to Strengthen Financial Structure of its London Airports

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BAA has unveiled details of a £500 million equity injection into its London airports group.

The injection will consist of £200 million of new equity from shareholders and £300 million from BAA Airports Limited and FGP Topco Limited, the ultimate holding company of BAA, which is jointly owned by BAA’s three controlling shareholders. The funding will be used to pay down debt, strengthen the group’s medium-term financial ratios and facilitate its access to the capital markets.

The £300 million equity injection from BAA Airports and FGP Topco is partly funded by finance raised against FGP Topco's holding of £225 million of BAA Funding Limited bonds.

Of the £500 miliion, £260 million has now been injected into BAA (SP) Ltd while the remaining £240 million is expected to be injected in January 2010.

The £300 million equity injection from BAA Airports and FGP Topco has been approved by the relevant boards. The £200 million of new equity from shareholders requires the formal approval of BAA’s three controlling shareholders. 

The injection follows October’s announcement of the Department for Transport’s measures to strengthen the financial resilience of major airports, which removed key uncertainties for BAA and its creditors; the sale of Gatwick, the net proceeds of which will be used by BAA to pay down debt; and the encouraging improvement in recent passenger traffic figures, particularly at Heathrow.

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