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Why BAA’s refinancing can’t get off the ground

The foundation on which Ferrovial built its acquisition of BAA was its securitization exit. But nearly a year after the buyout, the refinancing is nowhere to be seen. Louise Bowman finds out what’s happening.

"IF YOU DRAW up a list of things that make a deal difficult, BAA had them all." So said Citigroup’s Philip Robert Tissot of Airport Development and Investment’s acquisition of BAA last year. The same could probably said of the proposed refinancing of the ADI acquisition, a massive £8 billion-plus securitization that had been due to be completed by the end of March. In addition to its unprecedented size, this securitization could be backed by both regulated and unregulated assets, will necessitate the takeout of existing debt, will need to achieve investment-grade ratings despite very high leverage and is faced with an uncertain outcome from both an Office of Fair Trading investigation into the structure of the UK airport industry and a regulatory price control review that will cover 2008 to 2013.

It has been clear for some time that the initial timetable for the deal – which envisaged everything being tied up in the first quarter of 2007 – was not going to hold. As early as January 15, BAA felt moved to issue a holding statement to reassure the market that the refinancing was making good progress.

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