In South Africa Airports operator ACSA to boost debt with $170 mln bond issue

"We accept that tariffs must come down," Chief Executive Bongani Maseko told reporters at the results presentation.

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An Air France KLM arrives at Johannesburg's O.R. Tambo airport, June 6, 2010. REUTERS/David Gray play An Air France KLM arrives at Johannesburg's O.R. Tambo airport, June 6, 2010. REUTERS/David Gray (Reuters)
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South African airports operator ACSA aims to tap financial markets for about $170 million in 2018 to help fund investment in car and aircraft parking capacity, its finance chief said, raising concerns over the company's debt.

Airports Company South Africa, or ACSA, plans to spend nearly 9 billion rand ($694 million) over the next three years, with about 2.2 billion rand funded through new bonds, CFO Maureen Manyama said on the sidelines of the state-owned company's full-year results presentation on Tuesday.

ACSA has been paying off expensive debt it took between 2009 and 2010 to revamp and expand its airports ahead of the 2010 soccer World Cup and has cut its borrowings to 1.8 times core earnings, or EBITDA, from more than 6 times in 2011, its latest results show.

Tapping financial markets for debt is likely to push the net debt to EBITDA ratio to nearly 3 times, slightly below the levels agreed with creditors.

Concerns are growing that ACSA -- which has a Moody's debt rating of Baa2 with a negative outlook -- might breach that ratio after South Africa's transport department proposed a heavy reduction in passenger tariffs over the next four years, potentially reducing the company's earnings.

ACSA, which has nine South African airports handling more nearly 36 million passengers a year, makes nearly 40 percent of its 7.7 billion rand annual sales from passenger tariffs.

"We accept that tariffs must come down," Chief Executive Bongani Maseko told reporters at the results presentation. "But we do not like to see spikes, where one year you see the tariff goes down and the next it shoots up, because it doesn't help with both our planning and that of airlines."

($1 = 12.9626 rand)

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