EGPF Forum

Ferrovial mulls joining Macquarie in potential sale of AGS Airports

https://uk.finance.yahoo.com/news/ferro ... 55106.html

Not at all surprising - they vastly overpaid and have significantly underinvested in building market share ever since

Both have probably written down / written off their investments & loans

None of the three airports are 'setting the heather on fire' - all three have different issues but all three are getting more isolated from the competition

The average annual growth of the UK's top 25 airports is running at 16.9% - Glasgow #9 at 9.4%, Aberdeen #16 at 8.4%, Southampton #21 12.9%

Of course in this situation 'cash is king' so expect minimal expenditure on long term payback items eg capex, route development funding etc

It is always interesting to look at the EBITDA to see how cash is generated to fund the loans, usually via offshore entities

The latest quarterly results from Ferrovial note that the debt has been refinanced (edits in red show changes)

Cash amounted to GBP 17 million as of March 31, 2024 (GBP 65
million as of December 31, 2023). -£48 million

AGS net debt stood at GBP 616 million as of March 31, 2023 (GBP
693 million as of December 31, 2023).-£77 million

Refinancing of AGS’ Debt Facility: On March 14, 2024, AGS reached
an agreement with a pool of lenders to refinance its existing debt
facility, which had a maturity of June 18, 2024 and principal
outstanding amounting to GBP 757 million. The agreement closed on
March 21.

The new facility comprises a GBP 646.4 million term loan, a GBP 50
million capital expenditure facility, and a GBP 15 million revolving
credit facility. The facility has a 5-year tenor, with interest being
calculated by reference to SONIA plus an additional margin.
The agreement contemplates the facility being subject to lock-up
and default covenants, as well as cash sweeps which would apply,
during the initial four years, to the extent that AGS does not achieve
certain leverage ratios, as well as during the fifth year, irrespective of
the leverage ratio in such year. The impact of SONIA’s volatility in the
interest rate of the facility has been covered through the interest rate
swaps already contracted to fix the cost. Distributions to AGS’
shareholders are permitted subject to compliance with certain
leverage and lock-up ratios.

The former outstanding debt under the debt facility was repaid using
a combination of the proceeds of the new term loan under the
refinancing agreement, a GBP 80 million equity injection (GBP 40
million corresponding to Ferrovial’s share already contributed), and
AGS’ cash. Ferrovial’s contribution was funded by means of a
shareholder loan.


Sadly, Ferrovial clearly don't understand Glasgow as its website continues to state 'Glasgow is the second busiest airport in Scotland after Edinburgh and is the largest for long-haul flights, connecting Scotland with Asia and the North Atlantic.'

Sell it, get new owners in who want to take on the competition.

Sell it and start a fresh I say!

Further discussion on Yahoo News :

Spanish infrastructure giant Ferrovial is seeking to offload three regional British airports as a separate deal to sell its stake in Heathrow falters.

Ferrovial and co-owner Macquarie have enlisted advisers to sell AGS Airports, which owns and operates Aberdeen, Glasgow and Southampton airports.

Bankers at Credit Agricole and Solomon Partners have been tasked with overseeing the process, which is expected to kick off in the coming weeks.

A source close to the process said AGS will be sold in its entirety, allowing both Ferrovial and Macquarie to exit.

Each owns 50pc of the business. The pair paid £1bn for the company in 2014 but the business is expected to be valued at much more when it comes up for sale.

It comes as Ferrovial’s £2.4bn deal to sell its 25pc stake in Heathrow is at risk of collapse, fuelled by a dearth of prospective buyers for the wider business.

Saudi Arabia’s Public Investment Fund (PIF) and private equity firm Ardian teamed up to buy out Ferrovial last year but the deal is contingent on other Heathrow investors finding buyers for their stakes after shareholders triggered so-called “tag-along” rights.

It means another 35pc stake of Heathrow must be sold for the deal to complete.

Australia’s Macquarie had been touted as a potential bidder for the outstanding stake but subsequently scrapped its acquisition plans last month, as revealed by The Telegraph.

During a call with investors earlier this week, Ferrovial’s chief financial officer Ernesto Lopez Mozo refused to say whether the Heathrow sale will be completed by the end of the year.

Sources close to the deal have claimed there are no other bidders immediately apparent to support PIF and Ardian, with the latter unsuccessfully leading attempts to identify another investor.

Abu Dhabi’s Mubadala investment fund, backed by Sheikh Mansour bin Zayed Al Nahyan, had reportedly shown an interest earlier this year but is thought to no longer be considering the deal.

The proposed sale of AGS will represent the latest transaction in the aviation sector, after French infrastructure group Vinci Airports bought a majority stake in Edinburgh Airport for around £1.27bn last month.

According to its most recent results, AGS reported revenues of £166m for the year to December 2022, up from £87m in 2021 when pandemic restrictions were still in place.

Macquarie and Ferrovial declined to comment.

Please sell to the Saudis.. they will throw money at it

It’s Heathrow the Saudi’s want.

McG wrote: ↑Mon May 20, 2024 5:00 pm It’s Heathrow the Saudi’s want.

Well aware of that. Was more being hopeful

The 2023 financial results for AGS make interesting reading (in £m)

Revenues 198
Adjusted EBITDA 67
Adjusted EBITDA Margin 33.8%
Depreciation & Impairments -37
Adjusted EBIT 30
Adjusted EBIT Margin 15.0%
Financing Costs -51
Profit before Tax -21
Corporate Income Tax -1
Net Income -22

Although some of the Financing Costs will be interest on loans by the two shareholders, most will be to external banks

Would you pay over £1 billion as suggested in the Yahoo News article above!?


Meanwhile . . .
https://www.scotsman.com/news/transport ... rt-4644355