Monday, January 19, 2009

Tax Payers Soon To Own RBS's LCA Loan?

Just a few years ago London City Airport was sold for an estimated £750m, netting a windfall for Irish tycoon Dermot Desmond who bought the Docklands site in 1995 for only £23.5m.

At that time, the credit watchdog Standard & Poor's said the deal involved a "staggering" level of debt.

Michael Wilkins, S&P's infrastructure director, said the ratio was about 27 times EBITDA earnings, four times as high as most private equity deals. The loans are taken out on floating rates, making the operation vulnerable to any monetary squeeze.

AIG Collapsed last year with Global Investment Partners (Credit Suisse and General Electric - the owners of LCA) buying their 50% share of the airport. GIP are now budding on Gatwick.

Financing for the transaction was provided by The Royal Bank of Scotland and Credit Suisse.
Royal Bank of Scotland is on course for the biggest loss in UK corporate history after revealing it expected to write down as much as £20 billion on the falling value of its assets and its investment in "Toxic Debt". The government is bailing out RBS today. The Taxpayer will now own 70% of Royal Bank Of Scotland.

As well as loans from RBS the airport relies heavily on flights to Scotland by bankers - now very thin on the ground. We wonder how many "ghost" flights and half full flights are taking off at the moment just so airlines can keep their slots? We already know that half/empty planes were in operation over a year ago from LCA.

So now you are not just annoyed by noise and choking fumes - YOU the taxpayer are covering the security bill and NOW you it seems possible that you could actually own the loan on the London City Airport! You actually couldn't make it up!

So just how far did your wages go to cover your bills this month whilst the government continues to throw money at private businesses such as London City Airport for security etc?