Grupo Ferrovial’s attempted takeover sees target BAA turn to A&O for advice

Allen & Overy (A&O) has scooped a mandate to advise BAA on the £2bn bond issue that is at the centre of Grupo Ferrovial’s potential takeover of the UK-listed airports operator.

BAA inserted a change-of-control clause into the bond issue after the bonds were sold, which means that the debt would have to be repaid immediately in the event of a takeover.

Bondholders now have the right to buy back the bonds at par value if BAA is taken into new ownership and if the company’s credit rating falls below investment grade. The move may act as a potential ‘poison pill’ as it may significantly increase Ferrovial’s financing costs. Clifford Chance is advising Ferrovial’s lending banks, Citibank and Royal Bank of Scotland (RBS).

Spanish contstruction company Ferrovial, which is being advised by regular counsel Freshfields Bruckhaus Deringer, said a fortnight ago that it was considering launching a takeover of BAA.

Herbert Smith corporate partner Gareth Roberts is advising longstanding client BAA on the corporate aspe-cts of the potential takeover.

Herbert Smith advised BAA last February on the £800m sale of some of its property portfolio to insurance group Aviva.

Meanwhile, Linklaters is acting for ABN Amro, Barclays Capital, Morgan Stanley and RBS, which managed BAA’s bond issue.

BAA owns seven of the UK’s largest airports, including Heathrow, Gatwick and Stansted (first reported on Lawyer News Weekly, 15 February).