IRELAND. Respected national newspaper the Irish Times reported today that Aer Rianta may be forced to dispose of its international assets, including its offshore duty free interests, to facilitate the company break-up ordered by Transport Minister, Seamus Brennan.
The report claimed that legal advice given to the Department of Transport by the Attorney General had confirmed significant legal obstacles to the break-up of the company into three new airport authorities (Dublin, Cork, Shannon). “The solution may require the sale of a number of subsidiaries to boost the company’s financial reserves, according to sources familiar with the problem,” the newspaper reported.
The issue stems from Aer Rianta’s conversion into a public limited company in 1998. As a PLC, Aer Rianta can only pay a dividend to its shareholder if it has built up sufficient profits to cover the dividend. Under the Department of Transport plan to break up Aer Rianta, its assets will be distributed to three new state-owned airport authorities for Dublin, Cork and Shannon.
The Department’s legal advice is that this will in effect constitute a dividend payment, because the beneficiaries of the asset distribution – the government – is the shareholder of Aer Rianta. But the value of the assets that are to be distributed – the three airports – significantly exceeds the company’s accumulated reserves.
The Irish Times said that according to Aer Rianta’s 2002 accounts, it has accumulated profits of €200 million on its balance sheet, while the value of the airport assets to be transferred exceeds €400 million. The report said that the break-up of the company is now expected to take place in a phased manner rather than the “˜big bang’ approach originally envisaged.
Attention has now turned to the company’s international interests and its Ireland-based Great Southern Hotel group. The latter is valued at around €200 million. Under the break-up plan, ownership of the group was intended to be transferred to the Dublin airport authority, which is to assume all Aer Rianta group debts of more than €400 million.
Aer Rianta International had a turnover of just under €47 million in 2002. It manages airports and duty free business overseas as well as investing in other airports. It holds stakes in Birmingham, Dusseldorf and Hamburg airports and has a portfolio of duty free operations in locations as diverse as Montreal, Kiev, Bahrain, Moscow, St Petersburg and the Middle East. Until now, government sources have said little about the fate of the international division. Local sources have suggested it would become part of one of the newly-independent airport bodies but a sale is a strong prospect, according to reliable sources.
Speaking last week in the Dáil, Minister Brennan said that despite the difficulties he expected to meet the deadline of this summer for the reorganisation of the airports.
