MidCo, an investor group led by Citi Infrastructure Investors, is seeking a six month extension on an upcoming deadline to close on its $2.5 billion long-term lease of Chicago’s Midway Airport.
MidCo is currently not in a position to close on the transaction, according to a person close to the transaction.
Under an agreement the consortium signed with the City of Chicago in October, it has to reach financial close by 6 April or the city has the right to take $126 million that MidCo put on deposit as a letter of credit backing the transaction. The city can then keep the money and hang on to Midway Airport or give MidCo an extension of up to six months to close the deal.
The current expectation is the city will grant the extension, the person said.
George Casey, president of Vancouver Airport Services, a partner in MidCo, said in a statment that the decision to seek an extension is “not unexpected, given the current market conditions”.
Citi, Vancouver and John Hancock Life Insurance are approximately 3 percent, 89 percent, and 8 percent equity owners, respectively, in MidCo, according to an airport privatisation application they filed with the US Federal Aviation Administration (FAA) in October 2008.
In January, the FAA said it would delay its approval of the application to give MidCo additional time to negotiate financial arrangements for the transaction.
The application was filed on an all-equity basis but MidCo had reportedly been seeking $800 million of debt prior to financial close.