On 30 May Gemina, the holding company for Aeroporti di Roma (AdR), signed a refinancing with eight lenders of Eu500 million ($670 million) of operating company debt that was due to mature in February 2013. The agreement was an important milestone, since refinancing risk had created a downward pressure on AdR’s credit rating and undermined AdR’s access to the capital markets.

The proceeds of the refinancing are to be used partly to repay bondholders on a single tranche that was issued in 2003. “The refinancing is for the biggest tranche of bonds that was issued in 2003 and will expire in 2013" says Fabio Capozio, director at AdR. “It was an important step during 2012, because this refinancing allowed us to overcome the major risk the rating agencies underlined about the financial profile of AdR.”

AdR owns a concession to operate both of Rome’s main airports, Fiumicino-Leonardo da Vinci and Ciampino, until 2044. Gemina’s holding in the airport dates back to 2000, when IRI, the Italian state holding company, said that it would be selling part of its stake to a consortium comprising Gemina, Falck, Italpetroli and Impreglio. Gemina’s shareholders include the Bennetton family, UniCredit, Changi Airport, Mediobanca and Generali.

In February 2003, the sponsors closed a Eu1.8 billion refinancing, which represented the second takeout of acquisition debt after the shareholders’ purchase of AdR. The deal was split between Eu490 million in bank debt and Eu1.2 billion of Ambac-wrapped bonds of varying maturities, a deal that was structured to give the sponsors a more diversified investor base and flexible debt maturity profile.

The transaction was well-suited to the boom years, since the wrap from Ambac allowed the company to reach the broad universe of triple-A investors. The difficulty for Gemina was that that slice of bond debt was coming up towards maturity and AdR has effectively been locked out of the capital markets since the demise of the monoline bond insurers, so Gemina had to turn its attention instead to the bank market.

AdR faced the looming maturity on tranche A1 of debt issued by Romulus Finance, the securitisation vehicle that was set up in 2003. The debt has a maturity of 10 years and a bullet repayment, meaning that the entire principal amount, Eu500 million, was due in February 2013. The financing structure included a cash trapping mechanism that blocks dividends to shareholders a year before maturity, which acted as a further incentive for a quick refinancing.

In February last year Gemina started negotiations with lenders about refinancing the existing debt. The sponsors approached the same club of banks – Barclays, BNP Paribas, Credit Agricole, Mediobanca, Natixis, RBS and Societe Generale – that had provided a Eu100 million credit facility in August the previous year plus Societe Generale – the only new lender joining the transaction.

What followed was a streamlined negotiation process during which the sponsors were able to win credit commitments from lenders in April before signing the financing in May 2012. Banks are providing a Eu400 million term loan to refinance the bond debt. The banks did not need to meet the entire bullet repayment because some cash was being held in collateralisation account for the purpose of repaying bondholders.

The new facility will have a tenor of 3 years and a bullet repayment so the sponsors are still looking for an eventual capital markets exit. Banks are also providing a Eu100 million credit facility, which is to replace an existing revolver that was also facing a looming maturity. Banks are providing equal tickets across both tranches, which translates to an exposure of Eu62.5 million each.

The pricing on the term loan is slightly over 400bp Euribor, although that level is linked to the credit rating that Standard & Poor’s and Moody’s assign to AdR. The two agencies have since suggested that AdR could be rewarded with a higher credit rating because of its healthier credit profile and the recent renegotiation of its tariffs.

AdR is viewed by most lenders as a high-quality asset with strong cash flow generation but its rating has suffered because of the difficulties in obtaining a new tariff agreement with the Italian authorities for future capital expenditure plans. Unlike other European airports, the tariffs charged by AdR have remained fixed since the sponsors acquired the operating company, which has caused concern at rating agencies.

In October last year Gemina finally agreed the outline for a new tariff framework with the Italian Civil Aviation authority and received approval from the Italian ministries of infrastructure and economy shortly after. The new tariff scheme should allow for an improved credit rating and so improve Gemina’s funding options for the next refinancing milestone in 2015, specifically its access to the capital markets. Another possible positive is a mooted merger with toll road operator Atlantia, which has some shareholders in common with Gemina, and a larger balance sheet.

The refinancing signed in May last year, but first drawdown will not occur until 15 February this year, when the repayment to bondholders becomes due. There are still a few conditions precedent that need to be fulfilled but these are mostly in relation to hedging. The sponsors have not yet appointed a hedging bank, although all eight lenders will have the right to participate if they can meet the best terms on offer. 

Aeroporti di Roma
STATUS
Signed 30 May 2012
DESCRIPTION
Refinancing of the existing operating company debt that is due to reach maturity in February 2013
SIZE
Eu500 million
SPONSORS
Gemina (96%), C.C.I.A.A. (0.8%), Regione Lazio (1.3%), Comune di Roma (1.3%), Provincia di Roma (0.3%), Terzi (0.3%)
SPONSORS’ LEGAL ADVISER
Legance
LENDERS’ LEGAL ADVISER
Bonelli Erede Pappalardo
TECHNICAL ADVISER
LeighFisher