Ferrovial - Annual Report 2010

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Significant events

Significant Events

No agreement between the Polish Minister of Finance and Autostrada Poludnie, a company in which Cintra has a holding, for the construction and management of the A1 highway between Stryków and Pyrzowice (Jan-25, 2010).

The contract stipulated a prior period of a year for the concessionaire and the government to reach an agreement on the financial details of the concession. During this period Autostrada Poludnie requested that the commercial conditions be amended to make the project economically and financially viable for its sponsors while remaining acceptable for the authority granting the concession. Cintra had the backing of the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) for the financial closure. In the end, the two parties did not reach an agreement, so the contract will be rendered null and void.

The Dutch investment fund DIF (Dutch Infrastructure Fund II) acquires a holding in Amey Ventures Investments Limited, AVIL, a division of Amey plc.

DIF has bought 50% of the capital of AVIL. Amey retains the operational management of the projects and associated subcontracts. AVIL owns Amey’s holdings in 10 concessions (PFIs) in the United Kingdom, to which it had contributed 16.8 million pounds in capital and subordinate debt as of November 2009. This transaction removes 105.9 million pounds of debt from Ferrovial's consolidation perimeter, corresponding to the amount as of November 2009 of the debt of the two projects consolidated by the global method (Norfolk Street Lighting and the Belfast Education and Library Board).

Amey also reduces its commitment to future provision of funds for the companies managing the ten projects by 15.3 million pounds. The deal does not alter Ferrovial’s portfolio, as the portfolio associated with these projects is one of subcontracts, which are not affected by the deal.

Cintra begins the process for a future transfer of 10% of the capital of the concessionaire of the 407 ETR toll road in Toronto (Canada) (Mar-11, 2010).

Cintra indirectly owns 53.23% of the concessionaire 407 International Inc. The 407 ETR toll road is 108 kilometers long and skirts Toronto in parallel to the city's inner beltway, the 401 (one of the busiest highways in North America). It has a fully electronic barrier-free toll system capable of managing very high volumes of traffic without delays. It opened to traffic in 1997 and in 1999 the concession was granted to the consortium headed by Cintra for a period of 99 years. The process underway is part of Ferrovial's asset rotation policy, which aims to monetize part of the value created by the company. It is planned to use part of the money from the future deal for the early repayment of corporate debt, as well as investment in toll-road projects that are currently at the development stage.

BAA reports the impact on the operation of its British airports of the closure of air space due to the ash cloud from the eruption of the volcano Eyjafjallajökull in Iceland (May-20, 2010).

As a result of the closure of air space in the U.K. following the eruption of the volcano in Iceland, all BAA's British airports suffered closures from midday on Thursday, April 15 to April 20, 2010. As of March 31, 2010, Heathrow and Stansted, which from the group of BAA's regulated airports, called BAA (SP) Limited, had liquidity and debt facilities available for over 2.2 billion pounds and was in compliance with the financial commitments (covenants) of its credit. The maximum daily impact of the closure of the airports on the adjusted EBITDA and cash flow is between five and six million pounds. This amount could be recovered from revenue following the reopening of the airports and by reducing operating costs.

BAA announces an agreement to sell its holding in Airport Property Partnership (APP) to the British company Segro for £ 244 M (€ 280 M) (April-27, 2010).

APP was owned on a 50-50 basis by BAA and Aviva Fund Management. Preliminary estimates put the capital gains net of expenses obtained by Ferrovial at € 24.5 M. The deal is part of BAA's strategy to sell non-strategic assets. APP sold 33 assets to Arora Family Trust for 309 million pounds in 2008. The deal was closed on June 22.

Amey Plc, the subsidiary of FERROVIAL S.A., and Bechtel sell 100% of the shares in Tube Lines Limited, the concessionaire of three of the London Underground lines (07/05/ 2010).

Amey and Bechtel, the indirect owners of 66.7% and 33.3% respectively of the shares of Tube Lines Limited (TLL) have reached an agreement for the sale of 100% of these shares. TLL owns the PPP concession for the maintenance and refurbishment of three underground lines in London (Jubilee, Northern and Piccadilly). The shares were bought by Transport Trading Limited, which is controlled by the government-owned entity Transport for London. Amey will continue to provide support maintenance management services for TLL under the Opex Secondment Agreement, in very similar conditions to those before the sale. The price of 100% of the shares in TLL is 310.2 million pounds (€ 357.1 M), of which Amey will receive 206.8 million pounds (€ 238.1 M) for its holding, an amount equivalent to Amey's book value for them. The deal was closed on June 28.

Finance of 2.8 billion dollars (2.26 billion euro) for the LBJ highway in the metropolitan area of Dallas (Texas, U.S.) (17/06/2010).

The consortium headed by Cintra has successfully issued tax-exempt bonds (PABs) for the final part of the 2.8 billion dollars (2.26 billion euro) finance for the LBJ (IH-635) in Texas.

The highway, run on a managed-lanes toll scheme, is 21.2-kilometer long. It is located in the metropolitan area of Dallas, and has a concession period of 52 years. The project was financed from four sources. The first was the issue of private activity bonds (PABs), through which LBJ placed 615 million dollars on the US municipal bond market.

The Texas Department of Transport (TxDOT) made a contribution from public funds of some 496 million dollars to the project. The project also had a TIFIA loan from the US federal government for 850 million dollars. The three partners in the LBJ project, Cintra (51% of the capital), Meridiam (42.4%) and the Dallas Police and Fire Pension System (6.6%) put up capital of nearly 665 million dollars between them.

Cintra reaches an agreement to sell its holding in Autopista Trados 45, S.A. (50%) to the company FINAVIAS, an investment vehicle for AXA Private Equity's infrastructure funds. The remaining 50% is owned by Iberpistas SACE. (21/07/2010).

The amount of the transaction is 67 million euro, a pre-tax capital gain of 38 million euro, according to initial calculations.

Autopista Trados 45, S.A. manages the 14.5-kilometer section between O’Donnell and the NIV interchange with the M-45 highway in Madrid. The highway was opened in 2002 and the concession runs to 2029. The closure of the deal is subject to usual notifications and authorizations being granted.

BAA closes finance of 625 million pounds (€ 760 M) (Aug-20, 2010).

BAA has closed a 4-year junior Class B debt facility for 625 million pounds (760 million euro). This represents a great advance on the refinancing of the group’s subordinate debt, which stands at 1,570 million pounds (1,912 million euro).

BAA communicates the placement of 400 million pounds of bonds (Sep-01, 2010).

BAA has announced the successful placement of Class B bonds worth 400 million pounds. The bonds mature in 2018 and pay a fixed annual coupon of 6.25%. The company generated an order book totalling more than 1 billion pounds and was able to set the price within the initial range of 375 basis points above gilts (UK government bonds).

Cintra closes the sale of 60% of its stake in the company Cintra Chile to the Colombian company ISA (Sep-16, 2010).

Following some adjustments resulting from the assessment and repair of the damage suffered by the infrastructures after the earthquake on February 27, the closing price of the transaction was 6.8 million Unidades de Fomento (approximately 228.9 million euro). The total amount of the deal, including the sale of 60% of Cintra’s holding and the exercise of purchase and sale options for the remaining 40% for the buyer and seller respectively, is 381.5 million euros. The consolidated net income after tax attributable to the deal is estimated at around 270 million euro.

BAA reaches an agreement for the sale of its 65% share in Naples Airport to an entity controlled by the Italian fund F2i SGR for 150 million euro (Oct-1, 2010).

BAA holds 65% of GESAC, the company owning the concession for Naples International Airport until 2043. The closure of this deal successfully completes BAA's strategy to sell non-strategic and international assets and focus its interest on airports in the UK.

Cintra reaches an agreement with the Canada Pension Investment Board for the transfer of 10% of the 407 highway from a Canadian subsidiary for CAD 894.3 million (Oct-5, 2010).

The price of the transfer is CAD 894.3 million, to be paid at the close of the deal, which should take place within two months. The consolidated net income after tax attributable to the sale is estimated at about 2,470 million euro (the result includes the registration at fair value of the 43.23% retained by the company).

The deal depends on compliance with certain conditions. Among them is the possible exercise by the current shareholders of 407 International Inc. (SNCLAVALIN and INTOLL) of their preferential purchase or sale right (the latter in proportion to their holding) at the price specified above.

BAA communicates the placement of 500 million euro of bonds (Oct-05, 2010).

The company’s issue was oversubscribed by more than 2 billion euro by more than 200 financial institutions. The price was fixed within its initial range, at 205 basis points above mid-swaps.

BAA issues a statement in relation to the Court of Appeal ruling (Oct-13, 2010).

“We are disappointed that the Court of Appeal two of the five grounds argued by the Competition Commission.”

“We note the Court’s view that apparent bias in relation one of the panel members existed during part of the commission's investigation and will study this judgment carefully.” “We will be seeking permission to appeal to the Supreme Court.”

Ferrovial starts the process of transferring a minority holding in BAA capital. It is initially considering the transfer of 10% of the capital (Oct-22, 2010).

Ferrovial is the indirect holder of 55.87% in BAA. The start of this process is part of Ferrovial’s policy to make use of its assets by taking advantage of the financial strength of BAA’s capital structure and the improvement in its operational parameters and financial results. The funds that can be obtained from the future transaction will be used to invest in Ferrovial's new growth projects, as well as to pay down corporate debt.

BAA makes public the start of the final phase of subordinate debt refinance (Oct-26, 2010).

BAA has confirmed plans to refinance the remaining 465.8 million pounds of subordinate debt in BAA (SH) Plc, the parent company of BAA (SP) Limited and its subsidiaries that own the London airports. BAA (SH) has arranged finance of 250 million pounds with a group of banks and institutional investors. The new finance includes a 1-year tranche of 75 million pounds and another 5-year of 175 million pounds, with margins of 4.25% and 5% respectively.

BAA (SH) aims to complete the refinancing of the subordinate debt through an issue on the capital markets in the near future.

Ferrovial agrees the sale of Swissport with PAI Partners. The price of the deal is CHF 900 M (€ 654.3 M) (Nov-02, 2010).

Ferrovial has reached an agreement with the private-equity firm PAI Partners for the sale of Swissport International AG for 900 million Swiss francs (654 million euro). The deal had an enterprise value of 1,210 million Swiss francs (880 million euro).

BAA announces the placement of 325 million pounds of bonds, thus successfully completing the refinancing of its subordinate debt. (03/11/2010).

BAA has announced the successful placement of 325 million pounds in bonds to complete the early repayment of its subordinate debt. The bonds are denominated in pounds sterling and will pay a fixed coupon of 7.125%, at the lower end of the initial guidance range, and mature in March 2017. BAA (SH)'s new debt facility announced on October 26, 2010 will be reduced from 250 million pounds to 175 million pounds, so the total funds will remain at 500 million pounds. The funds obtained will be used to refinance 465.8 million pounds remaining from BAA (SH)’s line of subordinate debt, which matures in 2011. The new finance extends the maturity profile of the Group's debt.

Ferrovial's subsidiary Cintra closes the sale of 10% of 407 ETR (Nov-18, 2010).

Cintra has closed the sale of 10% of the concessionaire 407 ETR Concession Company Ltd in Toronto (Canada) to the Canada Pension Plan Investment Board.

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This is an electronic version of the 2010 Annual Report prepared by Ferrovial S.A. for its stakeholders, which aims to be complete and accurate. The contents of this version can be checked by referring to the print version. A copy of the print version in PDF format is available to download on this web page