Iberia financing nearly in place

The TPG Capital-BA consortium has secured a team of banks to underwrite its bid for Spanish airline Iberia, after the chief executive of the UK airline Willie Walsh said the bid would be tabled within four to six weeks.

The financing is nearly in place in the bid for Spanish airline Iberia by the TPG Capital-BA consortium, according to a city source. Spanish bank Banco Santander, UK bank RBS, US bank Citigroup and French bank Natexis are financing the bid, the source said.

As well as the US buyout firm TPG and the UK airline BA, Spanish firms Ibersuizas and Quercus Equity and Banco Santander’s captive firm Vista Capital are part of the consortium. It has been in due diligence with the airline since early August when the credit market problems became apparent.

The source said: “There’s been a positive response from the banks but the bid has taken longer because in the new credit environment everything has to go through risk committees.” The financing is “near-as-dammit” in place, he said.

BA chief executive Willie Walsh said at an aviation lunch in early November a formal offer could take as little as four to six weeks to assemble. He also said the problems in the credit markets had delayed the bid. BA declined to comment.

Any bid must have at least a 51 percent stake held by Spanish firms to meet the requirements of the Spanish regulator. BA is using its 10 percent stake and providing the consortium with its options to buy another 30 percent of the company.

Before the problems in the credit markets it had been thought the bid price would be at €3.4 billion ($5 billion) or €3.60 per share. However, another city source said last month he thought the bid price may well be lower if it were to go ahead.

Iberia’s share price was unchanged today at €3.36 per share. This price has gone down significantly from the €4.11 per share high it reached on the back of bid speculation in the summer. At the time it was thought that rival bidders included UK buyout firm Apax Partners, German airline Lufthansa and European airline KLM-Air France.