ONE of the world’s biggest investment companies has wiped more than £100m of debt from Newcastle International Airport as it became the operation’s new partner.
In a huge deal for the airport, AMP Capital clinched a 49% stake in the organisation nearly five months after Copenhagen Airports confirmed it was selling off its overseas airport interests.
But taxpayers will still have to shoulder a £68m burden facing six of the seven local authorities – South Tyneside, Newcastle, Sunderland, Gateshead, Northumberland and Durham – who are collectively known as LA7 and own 51% of the operation.
Elected Mayor Linda Arkley has refused to let North Tyneside take part in the debt restructure, claiming it was not among the council’s priorities, but without the contribution of AMP Capital the local authorities could have had to find significantly more to refinance the debt.
It was feared each council could have had to find tens of millions to keep the airport operational but last night it was claimed that all the cash they invested would be returned in full through dividends and interest.
The airport was due to refinance deficits totalling nearly £300m agreed by former chief executive John Parkin, who was awarded a controversial multi-million bonus as part of the previous deal in 2006.
Last night Coun Iain Malcolm, leader of South Tyneside Council and Chairman of LA7, said: “The LA7 authorities are delighted that the preferred bidder for the 49% shareholding has been selected.
“AMP Capital submitted an exceptional proposal and its involvement in running Melbourne and Launceston Airports in Australia will bring valuable airport experience. We’re delighted to have them on board and look forward to working with them to maximise the potential of the airport.
“The completion of the refinancing is also great news for the region. The airport is a major asset to the North East, generating millions of pounds for the local economy every year and supporting thousands of jobs.
“As a result we viewed the further investment by the local authorities as the right thing to do, not just for the airport, but for the whole region.”
A statement released last night said a loan package totalling £218.5m left the airport with a debt of £178m after the refinance package. It means that nearly £120m has been wiped out from the deficit, which previously stood at £298m.
The negotiations had been staged against a backdrop of controversy following a High Court hearing last month, in which it was said that Mr Parkin had secured a £6m bonus because the airport’s remuneration committee chair – who was meant to be keeping a check on him – didn’t open her emails.
The claims emerged after the airport lost a £5m court case against Eversheds, the firm who helped put together Mr Parkin’s contract during negotiations in 2005 and 2006. But The Journal understands that no-one at the airport had received any sort of bonus for the new deal, which is due to be completed within the next three weeks.
Advisers RBC Capital Markets and KPMG negotiated the refinancing deal with five banks, the Royal Bank of Scotland, the Royal Bank of Canada, Barclays Bank, HSH Nord Bank and National Australia Bank.
A statement said: “The new bank facilities will support the growth of the airport and by significantly reducing the level of debt in the business will also reduce interest payments.”
AMP Capital – who operate in Australia, New Zealand, Asia, the United States and Europe – are already heavily involved in Melbourne and Launceston Airports in Australia.
Boe Pahari, AMP Capital’s managing director for Europe, said: “Newcastle Airport is a high quality asset with excellent facilities used by more than 4.4 million passengers per annum.
“The airport already has the necessary infrastructure for further developing its commercial business and for meeting future demand for traffic growth.
“AMP Capital has long-standing experience investing in airports with its investment in Melbourne airport dating back to 1997.
“We look forward to working with the LA7 and Newcastle Airport management to add value and support the long-term growth and development of the airport and the North East UK economy.”