Ewing survives line-up changes at BAA

This Friday (14 July) should have seen BAA shareholders gathering at the QEII
centre for the airport operator’s annual general meeting. But the company has
told the shareholders not to bother – just as well, as they might have had
problems recognising many of the directors.

Two weeks ago, five BAA non-executive directors headed for the departure
lounge just as ten Ferrovial appointees touched down, though FD Margaret Ewing
is still in place.

What’s happened?

Following the fierce take-over battle with Spanish infrastructure group
Ferrovial, BAA finally succumbed to a 950p a share offer, valuing the UK airport
owner at £10.3bn.

The events leading up to the successful take-over bid, which was declared
unconditional at the end of June, are well documented and the positions of both
finance director Ewing and chief executive Mike Clasper appear secure. But since
then there have been a few important developments.

First, the five non-executive directors have resigned, to be replaced with
ten new non-execs, a number of which currently hold directorships at Ferrovial.

Secondly, Ferrovial’s plan to offer a partial share alternative to BAA
shareholders has been scrapped due to a lack of interest. The share vehicle,
Altitude Assets would have been listed on AIM.

Thirdly, the Office of Fair Trading has confirmed it will probe BAA’s
domination of UK airport ownership.

What is going to happen?

There’s plenty to be getting on with, so it is likely Ewing will stay put,
even if she loses the distinction of being one of only three women FDs in the
FTSE 100 – BAA left the index at the end of June, to be replaced with Icap.

The OFT investigation will rumble on – BAA owns seven airports in the UK,
including Heathrow, Gatwick and Stansted as well as a number of Scottish
airports, and the OFT reckons that nearly two thirds of air passengers travel
via a BAA operation.

But there is also the prospect of BAA being broken up in the future.
Ferrovial’s FD Nicolas Villen will be looking at the possibility of selling part
of the airport operator after the end of an agreed 18-month lock-in period. This
could involve the possibility of Ferrovial finding a partner in BAA, though the
company has yet to talk to anyone about the proposition.

And a partial re-listing of BAA’s capital could also be on the cards, but
don’t expect any movement for at least five years – this idea is still in the
departure lounge.

What’s in it for Ferrovial?

At the beginning of July, Ferrovial’s finance director Nicolas Villen said
the group’s acquisition would have an initial negative impact on the group’s
balance sheet. But he believed there would be a positive contribution from 2009

To offset the negative impact on earnings per share, Villen said Ferrovial
was considering the sale of its shares in Bristol and Sydney airports.

He will also be working on a refinancing of Airport Development &
Investment (ADI), the consortium led by Ferrovial that acted as the acquisition

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