BAA Toggle Facility

TIF interest in BAA Toggle Facility:

2.0%

BAA is one of the world's leading international airport operators and owner of seven UK airports, including the three London price regulated airports of Heathrow, Gatwick and Stansted.

TIF holds £11.7 million face value in the BAA Toggle Facility arranged to part fund the acquisition of BAA by Airport Development and Investment (Holdings) Limited (ADI). The ADI consortium consists of Spanish construction and infrastructure group, Ferrovial Infraestructures, S.A., Canadian financial institution, Caisse de dépôt et placement du Quebec, and the Singaporean Government's private equity investment arm, GIC Special Investments Pte Ltd.

Performance highlights 2007

BAA reported results for the year ended 31December 2007. Group revenue from continuing operations increased by 7.9 percent to £2,247 million on the previous year and group operating profit from continuing operations increased by 13.4 percent to £747 million on the previous year.

For the year ended 30 June 2008 the number of passengers passing through BAA's UK airports was 149.6 million, an increase of 1.0 percent on the previous year.

BAA continued with its asset divestment program during the period, completing the sale of World Duty Free Limited to Autogrill S.p.A. for £546.6 million (plus £15.8 million in accrued interest), a partial sale of Airport Property Partnership assets for £265 million and the sale of its Australian assets for £340 million. All net proceeds were used to retire outstanding debt.

The United Kingdom Civil Aviation Authority published its final decision on the price controls for Heathrow and Gatwick Airports for the five years from 1 April 2008 and confirmed a pre-tax real weighted average cost of capital of 6.2 percent for Heathrow and 6.5 percent for Gatwick.

In June 2008 BAA announced that nine banks agreed in principle to provide a backstop facility of £7.65 billion to be used in connection with the establishment of a permanent financing structure by BAA and that existing bondholders had agreed to support the migration of all BAA bonds into a new financial structure.

In August 2008 the UK Competition Commission published its 'BAA Airports Market Investigation - Emerging Thinking' provisional findings report in which it has indicated that BAA may be required to dispose of three of its current airport portfolio, including at least two of its London airports. After a consultation period, the final report will be published by March 2009. The financing documentation provides certain protections to ensure gearing levels do not increase following any material asset sales.

In September 2008, as a response to the UK Competition Commission report, BAA announced plans to sell Gatwick Airport. Hastings will monitor this development closely over the coming months.

Performance outlook

BAA's debt refinancing initiative and the UK Competition Commission's final report due by March 2009 will continue to be closely monitored. The outlook for BAA remains stable given its continued ownership of the largest London price regulated airport, Heathrow.