BAA gives guarantee on bonds

BAA yesterday bowed to pressure from bondholders to protect them should the airports operator be taken over by Spain's Grupo Ferrovial.

The owner of Heathrow, Gatwick and Stansted airports agreed to buy back £2bn of bonds at the price at which they were issued last week, plus interest, within 90 days of any takeover that saw them downgraded to "junk" status.

Investors that subscribed to the bonds - to be used by BAA to finance its takeover of Budapest airport - had threatened to walk away unless safeguards were put in place. They fretted that the Spanish would load Britain's biggest airports operator with debt should it take control, making their investment more risky.

The bonds rose yesterday, but analysts at the French bank BNP Paribas warned that the changes to the terms of the bonds could be seen as a "poison pill" defence tactic that may leave BAA open to legal claims from shareholders.

Madrid-based Ferrovial's surprise announcement earlier this week that it was mulling a bid spurred BAA shares 15 per cent. Yesterday they edged 0.5 lower to 779p, despite speculation that other potential predators may be circling.

Other names in the frame include Macquarie, the acquisitive Australian investment bank that has tabled a £1.5bn hostile bid for the London Stock Exchange. Through its Macquarie Airports fund, itself listed in Sydney, it already owns Sydney and Brussels International airports, and holds chunky stakes in Bristol and Birmingham airports over here.

Macquarie Airports said only that it had not been approached about joining the Ferrovial-led consortium looking at BAA.

The private equity group Star Capital, which recently recruited the former chief executive of the engineer Invensys, Rick Haythornthwaite, is believed to have cast its eye over BAA too, but is unlikely to bid. Shares in BAA closed the day down 0.5p.

A takeover could throw into doubt government plans to grow the country's airports.