DealZone

Wings clipped

The first China-assembled Airbus A320 aircraft lands at the Tianjin Binhai International Airport after a test flight in Tianjing MunicipalityThe sale of BAA-owned airport Gatwick has been beset by delays and difficulties. Another cloud on the horizon might be government plans to launch a new regulatory regime for big UK airports.

BAA today complained that proposals to introduce a “special administration regime” for London’s Heathrow, Gatwick and Stansted would create additional uncertainty for investors and drive up the cost of airport finance.

The Department for Transport is considering introducing such a regime to safeguard operations if an airport operator goes bust. Similar schemes already exist for power and water supplies.

UK airport regulator the Civil Aviation Authority on Friday backed the BAA in its own response to the government’s plans, arguing that the special administration regime was unnecessary and the government’s ideas blurred the line between regulator, user and investor, leading to confusion and uncertainty.

Bondholders to BAA, owed 4.5 billion pounds, are watching the situation closely, worried their rights will be trampled on. Meanwhile, Gatwick bidders and prospective Stansted buyers will also be keeping the UK government on the radar, checking to see if mounting pressure leads to a last minute change in course.

Heineken brews up loan-to-own deal

Distressed debt investors seek to pick out the diamonds in the rough, the good companies that can be turned around given a fair wind and the right management and capital structure.

These specialist investors buy up the debt of struggling companies aiming either to sell on the debt when the company recovers, or grab an equity stake if the company is forced to cut its borrowing via a debt-for-equity swap.

Stepping into this territory is Dutch brewer Heineken, which has bought up 49 percent of the debt of Globe Pub Company, a UK pub chain owned by property entrepreneur Robert Tchenguiz.

Another one bites the dust

The Essent electricity plant is seen in MoerdijkAnother auction — appropriately enough, this time of a waste management firm — is consigned to the dustbin of history. As Catherine Hornby and I wrote earlier:

“Dutch utility Essent scrapped the sale of its waste-management unit, blaming low prices and other problems with bids for the failure of an auction that had once aimed to raise a billion euros or more.

“The sale of Essent Milieu, which bankers began working on in late 2008, had originally promised to be one of Europe’s first big leveraged buyouts (LBOs) since the credit crunch, with a staple financing helping attract private equity firms such as BC Partners and PAI.

Repaying TARP on a high

As several large banks rush to the market to raise capital, one question remains: What’s the correlation between their ability to raise equity now and their strength in the face of a deeper recession if the early signs of a possible recovery prove false?

This morning Morgan Stanley joined the bandwagon of banks raising capital to pay back TARP. The Wall Street bank said it intends to raise $2.2 billion in common equity to satisfy a supervisory condition to enable it to redeem TARP preferred capital. It follows JPMorgan Chase and American Express, which announced their plans Monday.

The offerings come after the Fed said Monday the government will announce next week which of the 19 stress tested banks will be allowed to repay the funds. One condition for repayment is that they are able to raise money in the public equity markets.

The Office: More tragedy than comedy for UK banks

Pedestrians walk in the financial district of Canary Wharf in London March 24 2009. With property markets stabilising and hopes that the worst of the financial crisis is behind us, Europe’s banks are now looking to resolve their next biggest problem: 225 billion pounds of loans backed by UK commercial property.

As Sinead Cruise and I wrote earlier today, banks are now organising to sort through this massive debt pile, picking the good from the bad, foreclosing on properties and selling off what they can.

“Lenders have long turned a blind eye to breaches of covenants as long as they met interest demands by collecting rents. But they are now abandoning this softly-softly approach as the British economy worsens, planning foreclosures on a scale not yet seen in this cycle.”

Deals du Jour

Cars dominate headlines again, with a GM bankruptcy looming and Chrysler CEO Nardelli saying he expects a deal with Fiat on Friday. In other news, Chartered Semiconductor denies a newspaper report that Advance Technology Investment has bid for Temasek’s majority stake in the firm. For today’s headlines, click here.

And here is what we found of interest in newspapers:

Credit Suisse has begun a plan to sell its London property estate and raise up to 500 million pounds ($800 million), the Financial Times reported.

Terra Firma has been forced to inject more cash into EMI after the debt-laden UK music group missed targets imposed in banking covenants, the Financial Times said. The Wall Street Journal separately said Terra Firma had put up an additional 28 million pounds to bail out EMI.

Liveblogging Chrysler in court

Reuters’ Emily Chasan will be sending live updates from the Indiana pensioners’ challenge to Chrysler’s bankruptcy in U.S. District Court scheduled to begin at 11:30 am on Tuesday. Read her updates on DealZone or follow the DealZone Twitter account.

Deals du Jour

India’s Bharti revives its merger talks with South Africa’s MTN while Rio Tinto, in another long-running saga, says its deal with Chinalco deal is still “evolving”. In banking land, Swiss private bank Julius Baer buys Milan-based asset manager Alpha SIM. For top deals of the day, click here .

And in the newspapers:

* Goldman Sachs and private equity firm MBK Partners will jointly buy Universal Studios Japan (USJ) in a $1.4 billion deal, South Korea’s Mail Business Newspaper reported.

* Lehman Brothers Holdings Inc’s U.S. estate administrators will ask a federal judge to approve a framework for coordinating bankruptcy proceedings for the bank’s subsidiaries worldwide, putting them at odds with its administrators in the UK, the Wall Street Journal said.

No bruised egos as Bharti-MTN redial once again

Exactly one year ago, squabbles over control forced Bharti Airtel and MTN to ditch their hope of forming a global telecoms group, but both emerging markets-focused companies are back on the negotiating table to thrash out a $61 billion merger.

What’s changed?

MTNFor a start, both firms are now publicly talking about a detailed structure for the combined entity, something that was missing last time.

As part of an initial deal worth more than $23 billion unveiled on Monday, Bharti will pay in cash and shares for 49 percent of MTN, while MTN pays cash and stock for an effective 36 percent stake in the Indian firm. Previous merger talks collapsed when the South African firm proposed a new structure that would have seen Bharti become an MTN unit.

from Photographers' Blog:

Tim Geithner : What’s In Your Wallet?

What's in U.S. Treasury Secretary Timothy Geithner's wallet? Not much.

While testifying in front of a House Appropriations Subcommittee on Capitol Hill Thursday Geithner was shown a $50 Billion Zimbabwean bank note (rendered worthless by Zimbabwe's hyperinflation) by U.S. Representative John Culberson (R- TX) and asked if he had ever seen one himself. Geithner immediately pulled a piece of Zimbabwean currency out of his own pocket and showed it off to the committee. At the next break in the hearing I approached Geithner and asked how he happened to have a piece of foreign currency in his pocket. His response was "I often have some foreign currency in my wallet. Want to see?" He pulled a very thin and mostly empty wallet from his pocket.

Amongst many empty slots in the thin weathered leather wallet there could be seen three credit or debit cards with Visa and Mastercard logos (all inserted into the wallet upside down so that the card issuers could not be seen) and an old and yellowed looking identification card of indeterminate origin.

From inside the wallet Geithner extracted a small pile of receipts and paper including a New York City MTA farecard, pointing out that there were European Euros tucked amongst the paper.