BAA received at least six indicative bids to acquire London Gatwick airport yesterday, as the process to take over the second-largest UK airport intensifies.

Bidders believe they can improve the operational efficiency of the airport, but bids are expected to be depressed both by the problems of finding sufficient debt finance and the cost and terms of the debt as well as by falling passenger traffic.

BAA and Spain’s Ferrovial, its parent company, have been hoping to attract offers of about £2bn, but bidders indicated yesterday that a winning offer was more likely to be in the range of £1.7bn-£1.8bn.

Some bidders in part blamed the terms of the conditional £1.1bn acquisition debt package being assembled by RBS and HSBC, advisers to BAA, saying it was unattractive given the maturity of only 18 months and the risks involved in refinancing the deal.

Financial Times