Chicago's USD$2.52 Bln Airport Lease Deal On Hold

Chicago said on Tuesday it is negotiating to give a consortium up to six months longer to find financing for its USD$2.52 billion lease deal for Midway Airport, citing the recession's impact on financing.

If the 99-year lease deal with the Midway Investment and Development Corporation consortium falls through, the city said it gets to keep a USD$126 million letter of credit. It could then resubmit the lease offer when the economy improves.

The consortium is made up of Citigroup unit Citi Infrastructure Investors, YVR Airport Services and John Hancock Life Insurance.

The consortium won a bidding process over five other groups and the deal was supposed to close in January. The closing date was then extended to April 6.

"The global economic recession is obviously having a substantial impact on the availability of financing," city spokeswoman Jodi Kawada said.

"We may allow extra time to ensure we're doing everything we can to close the transaction, if possible," she said.

Chicago had planned to use some of the proceeds to retire USD$1.3 billion of outstanding Midway debt, while 90 percent of the USD$1 billion Chicago was to net from the deal was to be spent on infrastructure improvements and city pension funds. The remaining USD$100 million was unencumbered funds.

The airport deal was among several multi-billion dollar privatization deals arranged by Chicago, including leases of its Chicago Skyway toll bridge, downtown parking garages, and parking meters.