Sale of 10% of airport operator BAA could cut Ferrovial's debt

SPANISH firm Ferrovial plans to sell a 10 per cent stake in BAA, Britain's largest airport operator, in a move that would let the infrastructure group slash its net debt by more than half.

Ferrovial indirectly owns 55.9 per cent of BAA. Britannia Airport Partners, managed by Canada's Caisse de depot et placement du Quebec, owns 26.5 per cent and Singapore's biggest sovereign wealth fund GIC holds 17.6 per cent.

Rafael Fernandez, an analyst with Caja Madrid, said: "The sale would take Ferrovial's stake in BAA to below 50 per cent."

Ferrovial's net debt ballooned to €24.5 billion (21.7bn) as of June, an increase of €2.2bn from December 2009, €15bn of that from highly geared BAA.

BAA runs airports in Aberdeen, Edinburgh and Glasgow, as well Heathrow in London, Southampton and Stansted. It will have to dispose of Stansted airport and one Scottish airport after a British court last week overruled a previous decision in BAA's favour. A spokesman for the Competition Commission said its case against BAA was not affected by the identity of its owners as it focused on BAA's ownership of several airports.

Analysts said BAA's equity could be worth between €1bn and €2bn, implying Ferrovial could fetch up to €200m for a 10 per cent stake.

BAA saw a 5.1 per cent drop in passenger numbers in the first half of 2010 to 50 million passengers which it blamed on British Airways strikes and Iceland's volcanic eruption. As the economic recovery picked up, appetite for airport assets has returned, Caja Madrid's Fernandez said.

"The beginning of this process is within the policy framework of deriving value from Ferrovial assets, taking advantage of the financial solidity achieved at BAA," the Spanish company said in a brief regulatory filing.

A company spokesman said Ferrovial hoped to settle a deal to sell the stake some time in 2011.