March 31, 2009
Deal to privatize Midway hits turbulence
Chicago Mayor Richard Daley's plan to privatize Midway Airport had to be postponed for lack of investors during the recession, officials say.
The Chicago Sun-Times reported Tuesday that officials have postponed an April 6 closing date that would have made Midway the first privately held major U.S. airport.
The newspaper said the closing is likely to be delayed for six months to give Midway Investment and Development Company LLC an opportunity find more equity investors or bank financing for the mayor's $2.5 billion plan.
The MidCo team has not been able to put together the combined package of equity and debt to come up with the $2.5 billion they are obligated to pay, a source close to the transaction was quoted by the newspaper as saying.
The problem is the credit crunch that's effecting the availability of bank credit and the general decline in the stock market. Pension funds don't have as much money to invest. MIDCo has been working hard. They are relatively close. ... They believe with more time, they can get there, the source added.
MIDCo is a consortium comprised of New York's Citi Infrastructure Investors; YVR Airport Services Limited of Vancouver and John Hancock Life Insurance, based on Boston.
Under the plan, $1.15 billion of the privatization proceeds would have been used to pay off Midway Airport debt.
The deal also included $225 million for police and fire protection; $126 million for soundproofing and Midway capital projects already under way and $19 million for transaction fees and legal expenses.