Slaughters on standby to advise on BA rights issue

Slaughter and May looks set to advise long-standing client British Airways (BA) on an anticipated £500m rights issue.

News of the rights issue has come before what is expected to be a stormy AGM tomorrow and analysts believe that it is the company’s best way to reduce gearing and plug its £1.4bn pension deficit.  

Reports indicate that major investors were consulted at a meeting held last month at the offices of BA’s broker Merrill Lynch and one fund manager described the rights issue as “inevitable”.

However, it is understood that the planned move is still in its early stages and there are no plans for it to be added to the discussion agenda for the AGM.

If the rights issue does go ahead, Slaughters looks well placed to capitalise on its close 10-year relationship with the airline company spearheaded by corporate partner Stephen Cooke.

The firm snatched the blue-chip client from Linklaters in 1999, when it advised on BA’s attempted link up with Dutch airline KLM. Since then, the firm has cemented its relationship with the airline.

M&A chief Cooke is fronting negotiations on BA’s alliance with Spain’s Iberia and he also advised on aborted talks with Australian carrier Qantas.

Slaughters is one of the key legal players in the aviation industry, along with other magic circle giants Freshfields Bruckhaus Deringer and Linklaters.

BA posted a loss of £400m last year – its worst financial performance since 1982 – and now looks set for a rough ride from unions over its plans to cut over 3,000 jobs.

Slaughters declined to comment.