National Air Traffic Services (NATS) has successfully raised £600 mill…

National Air Traffic Services (NATS) has successfully raised £600 million in an inaugural issue of London listed guaranteed secured bonds. Lovells advised NATS on the bond issue and the associated refinancing of its bank debt, as envisaged in the restructuring implemented in March this year. The firm has been working continuously with NATS since 1999.

NATS has raised £600 million through an issue by its subsidiary, NATS (En Route) plc (the Issuer), of £600 million 5.25 per cent Guaranteed Secured Amortising Bonds due 2026, which are unconditionally and irrevocably guaranteed as to payments of principal and interest by MBIA. The bonds are also secured by fixed and floating charges by the Issuer, NATS and NATS Holdings, on an equivalent basis to its existing bank debt. The net proceeds of the bond issue are being applied towards repayment of an acquisition facility of £600 million and in meeting the expenses of the issue.

It is satisfying that following an intensive period of activity, this important transaction for the NATS Group has been brought to a successful close. It also represents another milestone transaction for Lovells Finance Practice, following the London Underground PPP transaction and the US$2 billion bond issue by SABMiller which closed last week.”

=NATS (En Route) plc provides air traffic control services to traffic operating in UK airspace, as well as in the Shanwick Oceanic Control Area (being part of the North Atlantic for which the UK provides services). It also provides terminal approach air traffic services to aircraft preparing to land at or departing from Heathrow, Gatwick and Stansted Airports.

The provision of air traffic services is primarily controlled in the UK by the Transport Act 2000 and the Civil Aviation Act 1982. The Issuer is the holder of the only licence issued under the Transport Act.

The structure of the NATS Group derives from the implementation of the public private partnership (PPP) in July 2001, which provided for the separation of the provision of air traffic services (carried out by the NATS Group) from the economic, safety and air space policy regulation (carried out by the Civil Aviation Authority (CAA)).

The events of 11 September 2001 placed the Issuer’s financial position under pressure and during 2002 a restructuring of the Group’s financial position (known as the “Composite Solution”) was developed. This restructuring was finalised on 19 March 2003 and included the introduction of BAA plc as the second private sector shareholder in the NATS Groups. Lovells advised NATS in relation to the PPP and the Composite Solution.

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