By Bob Sechler
Chicago city officials said Friday that it has received 16
responses from companies and investment groups interested in
bidding on a long-term lease to operate Midway Airport for
profit.
The city plans to review qualifications of the various entities
and then seek formal bids from those deemed to have the necessary
expertise and financial wherewithal. Mayor Rahm Emanuel has
stressed that the city might not go through with a deal, saying he
simply wants to "test market interest" in a Midway lease of under
40 years.
Global Infrastructure Partners LLC, which owns the U.K.'s
Gatwick airport, is among the interested parties. Grupo Ferrovial
SA (FER.MC), which owns Heathrow Airport in London, and
Australia-based global investment firm Macquarie Group Ltd.
(MQG.AU), also are involved in an investment consortium that has
expressed interest in Midway. Chicago had asked interested bidders
to respond by Feb. 22.
"The response generated ... is encouraging and provides the city
with a sense of the strong level of interest in a potential lease,"
Chicago Chief Financial Officer Lois Scott said in a prepared
statement.
A previous, high-profile effort to privatize Midway--negotiated
under the administration of Mr. Emanuel's predecessor, Richard
Daley--fell apart amid the financial crisis in early 2009, when the
investors were unable to obtain financing.
Under that deal, the private operators would have run Midway
under a 99-year lease in exchange for a $2.5 billion upfront
payment.
Chicago city officials said Friday that at least one member of
the investor group that won the previous bid-- John Hancock Life
Insurance Co.--has expressed interest again.
Regardless, Mr. Emanuel has said any Midway lease approved under
his watch must be significantly shorter and include a continuing
revenue stream for the city, in addition to upfront money.
He initially opposed renewing the Midway privatization effort
when he took office in May 2011 but opted to revive it in December,
partly because of the perceived success that Puerto Rico officials
had in attracting investors interested in running Luis Munoz Marin
International Airport in San Juan.
Under the Puerto Rico deal--which is pending final approval by
the Federal Aviation Administration, as well as financial
close--private operators plan to invest more than $1 billion in the
San Juan airport, including $615 million upfront in a leasehold
fee.
The investment consortium, comprised of
infrastructure-investment company Highstar Capital and Mexican
airport operator Grupo Aeroportuario del Sureste SAB de CV (ASR,
ASUR.MX), also would pay Puerto Rico a percentage of revenue over
the 40-year life of the lease.
Airport privatization is widespread in Europe and Asia, but the
effort in Puerto Rico is the only sizable U.S. project in an
advanced stage.
Write to Bob Sechler at bob.sechler@dowjones.com
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