Ferrovial could struggle to win the market support it needs to raise the long-term finance required to underpin its planned £16.4bn acquisition of BAA if it does not reach an agreement with the holders of bonds the owner of Heathrow and Gatwick airports issued.
HBOS, M&G and Morley are believed to be among the bondholders. Ferrovial has asked the Association of British Insurers to try to broker a settlement with investors in the coming weeks.
Four sterling bonds that involve “Spens” clauses are at the centre of the dispute.
They are a type of financial covenant that protect investors and stipulate that if the bonds are redeemed before maturity, the company must pay investors an interest rate equal to government gilts on the day the bonds were issue.
Some bondholders want Ferrovial to pay £200m more than the current market price of £2bn to buy them back.
References: Financial Times 21/06/06 page 23
