The Export Import Bank of Japan has agreed to provide a pounds 125m loan facility, pounds 30m of which will be drawn next year to fund initial construction work.
The remaining pounds 175m needed to complete the 15-mile link from Heathrow to Paddington station in London will be raised through a mixture of short and long-term loans, BAA said.
The Heathrow Express, a 70:30 joint venture between BAA and British Rail, is due to enter service in December 1997. More than 6 million passengers a year are expected to use the service, which will operate four times an hour and cut the journey time to 16 minutes.
Trains will run on 11 miles of newly electrified existing railway track from Paddington to Hayes in west London, before branching off into a new four-mile tunnel to Heathrow.
Confirmation of the agreement with the Japanese came as Eximbank announced that it is to locate its European operations in London with the appointment of a resident executive director responsible for lending in Europe, the Middle East and Africa.
Eximbank is a non-subsidised institution owned by the Japanese government. The agreement with BAA is part of its initiative to lend to projects in OECD countries.
Stephen Dorrell, Financial Secretary to the Treasury, said Eximbank's backing for the project demonstrated the confidence of overseas investors in the Government's initiative to attract private finance into public infrastructure projects.
Passenger traffic at BAA's seven airports rose to 7.4 million in October - a 7.9 per cent increase on the same month last year. Stansted again recorded the biggest increase, handling 23 per cent more passengers.
Traffic at Heathrow was up 7.3 per cent while Gatwick, which had been suffering from a slight drop in numbers, registered a 7 per cent increase thanks to a late surge in package holidays.Reuse content