The Puerto Rico Ports Authority has selected Grupo Aeroportuario del Sureste (ASUR) and Highstar Capital-owned Aerostar Airport Holdings as preferred proponents for a 40-year concession of the Luiz Munoz Marin international airport in San Juan.
The deal is a first in the USA, where either local governments or local quasi-governmental authorities operate most airports. A similar deal was attempted for Chicago's Midway Airport in 2008 but it collapsed due to various factors related to the financing and the slowdown in project finance markets post-Lehman Brothers.
"This will be the first major airport investment of its kind ever in the United States - highlighting Puerto Rico's leadership in infrastructure development," says Puerto Rico governor Luis G Fortuno, in a statement.
Aerostar will make $1.2 billion in payments to the grantor, says David Alvarez, executive director of the Puerto Rico Public Private Partnerships Authority (PRPPPA), which advised the port authority on the deal. These will be split between $615 million upfront and about $585 million in revenue sharing over the term of the contract.
The upfront payment will be financed by a combination of debt and equity, says ASUR in a statement.
Aerostar will also invest $1.4 billion in capital improvements over the life of the concession, according to the PRPPPA. This includes $195 million during the first three years.
The PRPPPA expects financial close to occur in the fourth quarter following approval from the US Federal Aviation Administration (FAA).
San Juan holds one of 10 slots in the FAA's airport privatisation pilot programme. It would be the only airport currently leased under the programme and the first since the Port Authority of New York and New Jersey's take over of Stewart International Airport in 2007.
"[The FAA programme] protects the interests of airport users and passengers and is expected to stimulate growth efficiency and operational improvements at the airport," says IATA.
Airlines serving the airport support the deal. "We look forward to working collaboratively with [the consortium] to develop the airport into a world-class facility that will support the airlines in offering exceptional customer service in a cost effective way," says Kevin Costello, chair of the San Juan Airport airline affairs committee and director of properties & airport affairs for JetBlue Airways.
JetBlue announced that San Juan was the sixth focus city in its network last month.
Aerostar beat the Ferrovial Aeropuertos and Macquarie-owned Grupo Aeropuertos Avance consortium, which offered an upfront payment of $567 million for the concession.
ASUR and Highstar each own a 50% stake in the consortium.
Credit Suisse is the financial adviser to the grantor, Mayer Brown is their US legal counsel, Pietrantoni, Mendez & Alvarez is local counsel and LeighFisher is technical adviser.