Aerostar Airport Holdings and the Puerto Rico Ports Authority have applied for US Federal Aviation Administration (FAA) approval for the Luiz Munoz Marin airport concession.
If approved, the deal would be the first private concession of an airport in the USA under the FAA's airport privatisation pilot programme, after the failed attempt to privatise Chicago's Midway airport in 2008. The application is now subject to a 60-day public comment period.
Grupo Aeroportuario del Sureste (ASUR) and Highstar Capital-owned Aerostar plan to partially finance the $615 million upfront payment and $195 million in planned capital expenditures during the first three years of the concession with a bond issue, according to the application. The bonds would total up to $410 million and include $350 million in acquisition bridge financing, $50 million from a capital expenditure facility and a $10 million revolving credit facility.
The project company has also received commitments from FirstBank Puerto Rico, Royal Bank of Canada and UBS to provide bank financing in lieu of a bond solution in the event that it is unable to raise the debt on the capital markets, says the application.
The balance of the upfront payment will come from $265 million in equity split equally between ASUR and Highstar.
The port authority will retire $505 million in existing debt and invest $110 million in regional airports in Puerto Rico with the proceeds of the payment.
Aerostar plans to finance the $145 million balance of the capital expenditures with available public funding, which could come from Puerto Rico or the US federal government, and the proceeds of passenger facility charges, according to the application. The concessionaire requested permission to levy the charges on passengers in its application.
Capital expenditures will go towards a variety of terminal improvements that are designed to increase the attractiveness of San Juan airport as a hub for the Caribbean region. These include a reconfigured and expanded ticketing lobby, expanded security screening areas, additional concessions, and concourse and terminal interior upgrades.
Southwest Airlines-owned AirTran Airways, American Airlines, Delta Air Lines, JetBlue Airways, Spirit Airlines, United Airlines and US Airways have agreed to the concession, according to the application.
The FAA requires that airlines with two-thirds of the total landed weight at an airport must agree to a concession for it to receive approval under the privatisation programme. The carriers who agree to the San Juan airport deal total 98% of the total landed weight at the airfield.
Aerostar won the 40-year airport concession in July, with commercial close on 24 July.