BAA says refinancing still on track for early Q3

By Sonya Dowsett

MADRID, June 26 (Reuters) - Ferrovial's (FER.MC: Quote, Profile, Research) 10 billion pound ($19.7 billion) debt refinancing linked to its British airports division BAA is on track to be finalised early in the third quarter, a BAA spokesman said on Thursday.

Spanish construction-to-services group Ferrovial has tried for over a year to renegotiate the debt in a deal aimed at cutting financial costs after original plans were delayed as bank credit dried up due to the global liquidity squeeze.

"We expected to complete early in the third quarter, that expectation still holds," a BAA spokesman said. "The timetable remains as it has been communicated over the last few months."

Banks arranging a 7.15 billion pound loan aimed to partly refinance the debt taken on by Ferrovial to buy BAA in July 2006, plus existing BAA debt, will launch this deal to investors at a bank meeting in London on Friday.

Meanwhile, talks with BAA bondholders continue as Ferrovial tries to move them into a new investment-grade structure, backed by income from its airports. Bondholder approval is essential for the deal to get underway.

One London-based BAA bondholder who asked to remain anonymous said he had his doubts whether Ferrovial would be able to get the deal sewn up to schedule, although he said the fact the banks had started the syndication process was positive.

"We still have major doubts that this deadline is achievable, it just seems too tight," he said.

"There's an awful lot of documentation to get through first of all and I'm sure there will be amendments required by both the bank lenders and the bondholders. Just to get the documentation done itself can take weeks and weeks."

Ferrovial shares have been volatile as the deadline for the refinancing nears. The stock was 4 percent lower at 39.3 euros at 1220 GMT, after gaining 8.6 percent on Wednesday. (Editing by Quentin Bryar)