Australia’s Perth Airport has successfully refinanced its debt obligations to reflect more favourable terms and secured millions of dollars in new credit facilities.
Macquarie Capital led a nine-bank consortium that arranged $1.26 billion in financing for the airport, in which Hastings Funds Management, an asset manager, owns 89.6 percent. The funding, which includes $942 million in revolving credit facilities, is a boon to the airport’s debt structure. These debt facilities are on a tiered structure spanning four-to seven-year terms.
A percentage of the credit will be used to refinance the total of the airport’s bank debt, which will result in better margins and more attractive financing terms. Also, credit facility maturities will essentially double to 5.3 years.
The capital that is not directed towards the refinancing, plus an additional $309 million bank facility, will support capital expenditures through 2015. Yet another $15 million working-capital facility was also secured. Perth Airport and its advisors decided to retain bonds issued in 2006 to maturity amid an attractive pricing model.
“The strong level of interest by lenders and the improved pricing and commercial terms underline the credit strength and strong outlook of Perth Airport,” according to Brad Geatches, Perth Airport chief executive officer, in the statement.
Following the debt restructuring, the airport will attempt to raise another $180 million in the equity markets, according to Hastings Funds Management. The latter is prepared to commit $37 million to the airport. If the equity raise is successful, a separate line of equity worth $54 million would be cancelled.
Located just outside the south-western city of Perth, the airport is in the midst of a $774 million expansion initiative that includes an interior and exterior overhaul of its amenities and access points.
As part of the growth efforts, Perth Airport awarded Broad Construction Services the mandate to construct a new $123 million local terminal for Western Australia over the summer. Virgin Australia is also benefitting from the project and will be the recipient of a new domestic pier, a statement indicates.
Moody’s has a Baa3 rating on Perth Airport with a stable outlook. The moderately speculative nature of the grade is due to the level of debt on the airport’s balance sheet, according to Moody’s.