CONFIDENTIAL
XCC(92)57
Airport Charges
34.
If, on the opening of the airport, the AA is prevented from imposing aeronautical charges at the level proposed or from imposing a PTC up to $100 (in March 1991 prices) because of any international obligation or as the result of any arbitration decision precluding it, the Government will make good any shortfall in debt service payments which result.
Air Traffic Control Charges
35. As described in paragraph 15 above, the Government will defer requiring payment by the AA of charges for air traffic control and meteorological services at the airport to such an extent as the lenders of project debt may require. The charges will only be deferred; the AA will repay Government in full, in due course, including interest. This is a provision similar in concept to the deferral of dividends. The shareholder (Government) is agreeing not to insist on payments from its corporation until the corporation is comfortably able to do so in terms of its debt service obligations.
Lending Environment
36. As noted previously, all financial modelling in the expected and low cases has assumed a lending environment no less favourable than that which currently prevails. No callable equity provision has, therefore, been provided to cover the eventuality that, when the AA first seeks to arrange its debt (the bulk of which is expected to be in the form of commercial loans raised in one exercise between the start of 1993 and the middle of 1994), the environment has become so adverse that it proves to be impossible to raise the level of debt expected in both the "expected" and "low" cases. Although we do not wish this matter to be addressed explicitly in the agreement, we have reached an understanding with the PAA that, in this event, Government would be prepared to negotiate a new agreement as
necessary.
FINANCIAL AND SAFFING IMPLICATIONS
37. Subject to Finance Committee's approval, a total commitment of $16.6 billion in nominal dollars will be provided as paid-up equity in the PAA. Government will also accept a contingent liability in the form of authorised equity of $8.5 billion in nominal dollars to be drawn only in certain defined circumstances. A further contingent liability will be accepted
Executive Council