Infratil resurrects Luebeck Airport deal

WELLINGTON - Infrastructure investor Infratil is having a second stab at buying Germany's Luebeck Airport after an early agreement stalled on failed expansion plans.

Infratil said today it has entered a modified agreement to buy 90 per cent of the Flughafen Luebeck Airport for E27,000 ($46,794) in cash and E10 million in shareholder debt.

The total purchase price of $17.4 million is well shy of the deal Infratil first mooted in April.

Infratil had agreed to pay E13 million and invest E60 million in a major airport upgrade.

That came unstuck when it failed to get regulatory approval for an extension of the airport runway from 1800m to 2324m, expanding the main taxiway and upgrading the instrument landing system.

As a result, Infratil lost out on a passenger deal with budget airline Ryanair to create a base at the airport.

Under the terms of today's deal, Infratil will pay a second instalment of E13 million in 2008, if passengers reach 1.2 million and a revised planning approval application for a runway extension, aircraft parking apron upgrade, additional carparking and terminal upgrades is successful.

Infratil reserves the right to sell the 90 per cent shareholding back to the airport's state owners, the Luebeck City Parliament, for the initial purchase price, less costs, should the revised plan fail to gain regulatory approval.

If Infratil declines to exercise this put option, the City may call for the 90 per cent shareholding to be transferred back to it at the same option price.

Infratil retains an option to buy the remaining 10 per cent shareholding after March 31, 2009 for a price based on financial performance.

The deal is subject to regulatory and local body approval, with a decision by the City Parliament expected early next month.

Infratil chairman David Newman said a good relationship between the two parties had helped it overcome the initial regulatory setback, which had come as a surprise.

"We believe in the prospects for the airport, the city and the region and we will be doing our best to assist realising this potential," Mr Newman said.

The airport, located 65km from the German city of Hamburg, requires significant enhancement, he said .

While the existing infrastructure meant Ryanair couldn't make the airport its base, it "remains committed to its existing services and continues to believe that the market can support additional services".

Infratil will fund the purchase from existing bank facilities.

Shares in the company jumped 8c to $3.60 on the news in a broadly positive post-Labour day market.

Infratil owns a 66 per cent stake in Wellington Airport, 100 per cent of Glasgow Prestwick Airport in Scotland, 20 per cent in Energy Developments and 88 per cent in the Australian energy retailer Victoria Electricity (VE).

- NZPA