InfraRed selling stake in provincial airport 

20 November 2018 - 12:00 am UTC

InfraRed hired Scotiabank to sell its majority stake in the Iqaluit International Airport Improvement P3 ProjectInframation has learned.

This divestiture will be conducted as a two-stage auction process. Teasers were distributed earlier this month. 

The CAD 296m (USD 286m) Iqaluit International Airport project reached financial close in September 2013 with four equity providers. InfraRed’s ownership, held by InfraRed Infrastructure Fund III, is of 80%, Bouygues owns 10% while Sintra and Winnipeg Airports Authority each own 5%. 

At financial close, the project had an 84:14 debt to equity ratio with CAD 130.68m fixed rate bond issued at par with a 5.092% coupon due 30 June 2047. CIBC, Scotiabank, Casgrain, National Bank of Canada and RBC participated in the capital markets financing. The bonds are rated “A-“ by Standard & Poors.

Bouygues Building Canada Inc. and Sintra Inc. are the construction contractors. Nunavut Airport Services Ltd. (subsidiary of Winnipeg Airports Authority) is the service provider. 

Located in Nunavut’s capital city of Iqaluit, the airport is the major gateway to the Territory of Nunavut as well as to Canada’s North. The 34-year concession expiring in September 2047 serves over 140,000 passengers a year. Construction started in 2013 and was completed in December 2017, according to documents seen by Inframation.

All of the service obligations, including life cycle and handback requirements are passed down to the service provider. Non-performance related deductions are also passed down to and borne by the service provider under the services contract.

The teaser describes the asset as a stable long yielding asset. 

The project has an availability based revenue model with the Government of Nanavut as counterparty. The Government receives annual transfers from the Federal Government covering 80% of its annual revenues. 

InfraRed declined comment on the situation. 

InfraRed selling stake in provincial airport