Update on Ferrovial's BAA refinancing knocks shares

By Sonya Dowsett

MADRID (Reuters) - Ferrovial's (FER.MC) UK airports arm said it may not be able to start talks with bondholders about a massive refinancing as soon as planned, knocking the Spanish firm's shares on Friday.

Its BAA unit said it still does not have enough banks to back the already delayed 10 billion pound asset-backed securitisation (ABS), the biggest ever attempted, but aims to complete the deal by early in the third quarter.

"BAA has not yet finalised certain aspects of its refinancing plans, including completion of the rating process and obtaining sufficient commitments from the banks asked to participate in certain bank facilities," it said in a statement.

One London-based BAA bondholder, who asked not to be named, expressed disappointment at the news: "We would have expected the bank funding to be tied up by now and the rating agencies pretty much ready to go."

BAA originally aimed to seal a deal by the end of last year for the ABS, which will use revenue streams from BAA's airports as collateral, but the global credit crisis has slowed the process.

The world's biggest airports operator with seven in the UK including London's Heathrow and Gatwick, BAA needs an investment-grade rating for the deal before it can move existing bonds into the new structure and reduce its cost of lending.

Ferrovial hopes to move non-convertible sterling and euro bonds into the new structure by the end of the second quarter, completing the refinancing by early in the third.

CASH INJECTION