Substantial market interest in credit financing for FBB
- European Commission gives the go-ahead
- FBB business plan successfully passes the EU stress test
- Substantial market interest in credit financing for FBB means project oversubscribed – consortium of seven banks set up
The European Commission has given the go-ahead for the financing package for Flughafen Berlin Brandenburg GmbH (FBB). Following detailed economic analysis, the Commission certified that the aim of the owners of the airport operating company, the federal states of Berlin and Brandenburg and the Federal Republic of Germany, can be compared to that of a private sector investor in as much as their objective is to make a long-term profit. The Commission also analysed the FBB business plan that states that the government investment – taking into account a number of potential risks – will return a profit. Additionally, the Commission found that guarantees offered by the owners are in line with market conditions.
Heike Fölster, Chief Financial Officer of Flughafen Berlin Brandenburg GmbH, stated: “The clearance by the European Commission secures the financing sought by the airport operator. This announcement gives us a clear basis to set up a new investment structure and start planning and organising the completion of BER Airport and the medium-term capacity expansion of the new airport for the German capital. The fact that our business plan successfully passed the stress test shows just how robust the long-term profitability of the project is.”
The new financing structure of the airport operator in detail
To secure the investment requirement of €2.2 billion euros needed to complete BER Airport and provide the capacity expansion needed in the medium term, the airport operator drew up and implemented a new investment plan. This consists of a shareholder loan of €1.107 billion which will be provided by the shareholders under the current low market prices and which will be fully repaid within 20 years. FBB will borrow a further €1.1 billion from commercial banks, part of which will be used to refinance ahead of term the €1.4 billion from a loan originally taken out in 2009, which would have run until 2019. Like the existing consortium loan, the new loan will be fully guaranteed by the shareholders Berlin, Brandenburg and the Federal Republic of Germany. The requirement for this guarantee to come into effect was the clearance of the European Commission.
To kick-off this round of financing, around 20 banks from the previous consortium as well as a number of other domestic and international banks were approached. More than half of the banks submitted binding offers on the basis of the shareholders providing a 100-percent guarantee. As a result, the official tender was substantially over-subscribed. The investment package that was selected as being the optimum solution is a fixed-rate loan which is to be used to repay the consortium loan and a variable portion which can be taken up flexibly by 2020. Both portions have a term of ten years.
The consortium consists of seven banks
After the conclusion of the negotiations headed by the Norddeutsche Landesbank Girozentrale, the new loan agreement is now ready for signing. The following seven banks make up the consortium:
Norddeutsche Landesbank Girozentrale
KfW IPEX-Bank GmbH
Investitionsbank des Landes Brandenburg
Berliner Volksbank eG
Berliner Sparkasse, subsidiary of Landesbank Berlin AG
Mittelbrandenburgische Sparkasse Anstalt des öffentlichen Rechts
The restructured investment plan for the new airport allows Flughafen Berlin Brandenburg GmbH to benefit from the current low interest rates offered by banks, thus providing planning safety for the coming years as well as making substantial savings in loan servicing expenditure.