BAA refinancing takes shape

British airports operator BAA will ask investors to vote on a bond exchange, a major step in its long-awaited plan to refinance debt after it was bought by Spain's Ferrovial in 2006.

The refinancing has been in the works for over a year but has been hobbled by the global credit crunch. In recent weeks, however, it has gained traction as Ferrovial won backing from banks for a £7.65 billion loan and BAA started talks with debt investors.

BAA said it would exchange existing euro and sterling bonds totalling €2.5 billion and €2.8 billion respectively for new securities with the same expected maturity.

It said a special committee of bondholders at the Association of British Insurers had informed the company the proposed refinancing was acceptable.

The new securities will pay higher interest and will also rank as senior secured debt, while the current bonds are unsecured.