Ferrovial ponders BAA duty-free sale - Times Online

Ferrovial ponders BAA duty-free sale - Times Online: "Ferrovial ponders BAA duty-free sale"

Spanish group mulls disposal of BAA's World Duty Free franchise as it prepares for £10bn refinancing
Rhys Blakely
Grupo Ferrovial expects to announce new asset sales in the next six to nine months, with the disposal of BAA’s duty-free business among possible deals.
The news came as the Spanish infrastructure group, which bought BAA, the British airports operator, for £10.3 billion last year, said its first-half net profit more than tripled as asset sales already completed offset higher financing costs.
The World Duty Free franchise could fetch up to £500 million. It has been reported that banks including NM Rothschild and Citigroup have pitched to advise on a possible sale.
World Duty Free has 65 shops and annual sales of £300 million. Ferrovial’s suggestion that it regards the business as non-core comes as BAA faces criticism for poor conditions at Heathrow, made worse after last year’s terror alert.
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Possible bidders for World Duty Free, which has outlets in all seven of BAA’s British airports, include Dufry, the Swiss travel retailer, which was linked to a possible sale at the end of last year.
Ferrovial has already divested assets to help to manage ballooning financing costs, which soared to €903.1 million (£610m) in the first half, up from €210.3 million in the same period a year ago.
Recent disposals included the sale of a 21 per cent stake in Sydney airport, which realised a capital gain of about €475 million, and the disposal of BAA's controlling stake in Budapest airport, which resulted in a capital gain of about €173 million.
This morning Nicolas Villen, the group’s finance director, said that Ferrovial was also considering selling BAA’s World Duty Free division.
Analysts have suggested that a sale would allow the Ferrovial-led consortium that acquired BAA to redeem its more expensive loan tranches.
Mr Villen said the unit was “not a strategic asset for us” and suggested a sale would be used to pay down debt.
Ferrovial is currently preparing an asset-backed bond offering of up to £10 billion to refinance the debt used to acquire BAA.
Mr Villen said credit jitters hitting global markets at present should not affect debt placements of infrastructure assets such as the one being prepared by his company.
He said: “This is going ahead slowly but surely ... we hope to complete before year-end ... it’s a very complex operation.”
Other possible asset sales include minority stakes in six airports in Australia and some property operations, including the group's property development unit Lynton.
However, Mr Villen added that the group’s share in Naples airport was “not for sale at the moment”.
Shares in Ferrovial were 2.3 per cent higher at €66.50 in morning deals after the company unveiled better-than-expected results.
Ferrovial said net profit surged 218 per cent to €756 million in the first half to June from €237.3 million a year earlier, boosted by capital gains from the sale of its stakes in Sydney and Budapest airports, as well as a lower tax rate at its BAA arm.
Analysts had forecast net profit of €452 million to €612 million.
Revenues grew 44.8 per cent to €7.1 billion, from €4.9 billion, while earnings before interest, tax, depreciation and amortisation (Ebitda) rose 132 per cent to €1.467 billion from €632.2 million.
The UK represented nearly 60 per cent of Ebitda, with BAA contributing €767.7 million, or 52 per cent of the group’s total.
The Competition Commission is also investigating a possible break-up of BAA’s dominant position. BAA's seven UK airports, which also include Gatwick and Stansted, handle nearly two thirds of flights to and from Britain.