UPDATE 3-Banks prepare Ferrovial's BAA stake sale-sources

Published 11/26/2010, 09:53 AM
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* Stake sale could raise 200 million euros - analysts

* Ferrovial could also remove BAA debt from balance sheet

* Pension, infra funds and SWFs likely to be contacted

(Adds HSBC declining to comment, Ferrovial shares)

By Greg Roumeliotis and Quentin Webb

AMSTERDAM/LONDON, Nov 26 (Reuters) - Spanish group Ferrovial has hired Goldman Sachs and HSBC to sell a 10 percent stake in BAA, Britain's largest airport operator, and the sale will begin next week, people familiar with the matter said.

The infrastructure group owns 55.9 percent of BAA, the operator of airports including London's Heathrow and Stansted. It announced the stake sale in October.

Analysts estimated the stake could fetch up to 200 million euros ($265 million).

By reducing its stake below a majority, Ferrovial will no longer need to consolidate the subsidiary's debt on its own balance sheet, which will more than halve its 24.5 billion euro debt pile.

BAA, Ferrovial, Goldman Sachs and HSBC declined to comment.

BAA's current minority owners are Britannia Airport Partners, managed by Canada's Caisse de depot et placement du Quebec, which owns 26.5 percent, and Singapore's biggest sovereign wealth fund, GIC, with 17.6 percent.

The sale is likely to follow a standard auction format, lasting a few months and with two rounds of bidding.

BREAK-UP ORDER

In the coming days Ferrovial's banks will start to contact a wide range of potential buyers, some of the people said.

These are likely to include pension and infrastructure funds from Canada, Australia and Europe, and sovereign wealth funds -- the types of investor that have shown interest in owning airport stakes.

For example, Global Infrastructure Partners bought Gatwick airport from BAA last year. GIP later sold stakes to the Abu Dhabi Investment Authority (Adia), South Korea's National Pension Service (NPS), and California Public Employees' Retirement System (Calpers).

Last year the Competition Commission ordered BAA to sell Stansted and either Glasgow or Edinburgh Airport, a decision BAA is still appealing. The commission asked for fresh feedback last week and said it could extend the break-up's timetable.

A pick-up in business flights at Heathrow, London's busiest airport, has helped stem losses at BAA. Pre-tax losses for the first nine months of this year shrank by three-quarters to 193 million pounds ($303.3 million), as revenues rose 4.4 percent to 1.54 billion.

Shares in Ferrovial stood 0.8 percent lower by 1450 GMT at 7.49 euros a share. The stock has shed almost 10 percent this year -- beating a 20 percent fall in Spain's IBEX 35 index but lagging the 5.2 percent drop in the Stoxx Europe 600 construction and materials index. (additional reporting by Andres Gonzalez in Madrid; editing by Douwe Miedema and Michael Shields)

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