Christchurch Intl Airport Credit Rating Change

Christchurch International Airport Credit Rating Change

Christchurch International Airport today announced that Standard and Poors have revised the Company's Credit Rating following their annual business review, from A-/Negative Outlook to BBB+/Stable. The key reasons for this change in ratings were a slower than expected growth, predominantly in domestic passenger movements, and the increase in debt that will arise from the new Integrated Terminal Development Project and its implications on credit ratios.

Neil Cochrane, General Manager Business Services, advised that the rating review was not unexpected, and that the BBB+ rating was entirely consistent with the capital structure approved by the Board in 2005 as part of the approval of Terminal Development expansion. "Whilst the domestic passenger volumes have not grown at the rate previously anticipated in 2006, the impact of the reduced charges has been more than offset by improved commercial revenues and initiatives taken to diversify the business", he said.

In addition Mr Cochrane noted that CIAL, like all major infrastructure providers, has periods where major investment is required, resulting in increases in the level of debt and consequential interest costs for the period leading up to the completion of the investment. However following the completion of the project and the substantial reduction in capital expenditure the strong cash flows from the ongoing business enable credit ratios to improve markedly over the forthcoming years.

He stated that the BBB+/stable rating was a positive outcome for the company as it provided more certainty to the capital markets and removed the uncertainty provided through the previous negative outlook that had been in place over the past two years.

ENDS

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