Sydney Airport is borrowing $850 million and dropping interim dividend to help it survive the COVID-19 pandemic as its traffic collapses.
The company told the ASX in a statement announcing the new funding, that its passenger traffic fell 97% (domestic) and 96% (international) in the first 16 days of April compared to the same period last year.
The airport said that was after 2 million passengers went through its gates in March, down 45%, as coronavirus travel restrictions came into effect.
With its cashflows drying up, Sydney Airport said it had secured $850 million in fresh debt to see it through the crisis and that it would not declare a dividend for the half-year ending June.
“We remain confident in the strength of our balance sheet and liquidity position, but we will continue to tightly manage liquidity and operating and capital expenditure to reflect the significant reduction in passenger traffic at the airport,” CEO Geoff Culbert said.
The $850 million of new two and three-year bank debt facilities means the airport will have $430 million of available cash, $1.75 billion of undrawn bank facilities and approximately $600 million of new USPP bond market debt (due to be funded in June 2020), for combined liquidity of $2.8 billion.
“This is comfortably in excess of the $1.3bn of debt maturing in the next 12 months and the $150m – $200m of expected capital expenditure over the same period. We also expect to remain compliant with our covenant requirements.
“Given the strength of our balance sheet and liquidity position, at this time we do not see the need to raise equity.
“Given the importance of liquidity, the current impact of COVID-19 and the uncertain near- term trading outlook, the Boards of SAL and SAT1 will not declare an interim distribution for the half-year period ending June 2020,” the company told the ASX yesterday.
The shares eased 2.8% to $6.19. They are down 27% so far this year.
