ARCHIVED - Corvera Airport, Loan paperwork still unsigned which invalidates bank loan agreements.

Corvera Airport Construction, Brussels verdict still not released

 2010-03-22

There are still just so many IFs hanging over this region

IF  Paramount  builds its theme park here.

IF Polaris goes to the wall today.

IF Chinese investors start to build in the region.

IF the property market and the economy picks up.

IF the drive for international tourism brings us all a better level of revenue.

And one which could have massive repercussions for all of them,

IF Brussels  dont approve the financing package our regional government agreed to ensure that Corvera Airport is completed and enters into operation. 

Unbelievably, there is still no decision from Brussels and yet work continues apace at the airport, with the roof forming on the passenger terminal and the control tower virtually completed.

As property markets collapsed in Spain and the banks tightened their purses, the consortium building Corvera Airport found it impossible to raise the loans they needed to complete the build of Murcias new International Airport and  faced  possible bankruptcy if new financing was not agreed by the end of January 2010.

Mindful of its importance to the region, and future projects for International development and tourism revenue, the Regional Government came up with a bail-out package to smooth the way for the loans to be acquired.

They gave a guarantee that the region would cover the loans should the consortium be unable to repay them, with the condition that the airport revert to regional ownership should this happen.

This was approved at an extraordinary meeting of the Consejo de Gobierno which  we are now told took place on the 1^st February as time ran out in the ordinary session on the 29^th. Agreement in principle had already been given, which enabled the consortium to gain the financing it required.

On the 28^th January the consortium signed the paperwork which would guarantee 200 million euros needed to complete construction, pending the signature of the regional government guaranteeing the loan.

However, somebody , somewhere knew the law and made sure that Brussels were aware what the Murcian government were up to, and Brussels sent a letter to the Community warning them that they must seek approval from the EU before signing any agreements, to ensure that they were not breaching strict EU law in relation to state funding of privately owned enterprises.

The Concejal for Infrastructure, Jose Ballesta is adamant that the region has not broken any laws or breached any European legislation by their actions, although the Consejeria de Economia y Hacienda, who hold the purse strings, are refusing to sign the loan guarantee.

Without the signed loan guarantee from the region, the financing deal brokered by La Caixa, and which includes Banco Espirito Santo, Caja Segovia, Caixa Tarragona, Caja Sol and the ICO, Instituto de Credito Oficial is invalid.

Which means that all the workers, contractors and suppliers building the airport at this moment are not guaranteed any payment for the work they are undertaking right now.

Brussels has already said that it will not guarantee a timescale for its ruling, and Ballesta is now saying that it is taking a long time to come to a verdict as this is the first case of its kind, the first Spanish airport to have been constructed by a private business and not by the state.

He is adamant of the legality in the regions actions, "The loan cannot be considered as state aid, as amongst other reasons, it doesnt constitute 80% of the total investment. If there are problems with our guarantee, how does that relate to the rest of the airports of AENA which are funded directly by the state?"

He says that the region were fully aware of their legal responsibility to inform Brussels about their actions, and that they did so as soon as they had decided officially to make the offer.

But of course, the fact that they only formally agreed on the 1^st February to make the offer, and the agreement had been signed on the 28^th does leave them a little open to attack.

So here we are now, no verdict from Brussels, no signatures on the loan guarantee, which invalidates the bank loan and leaves everybody building the airport now at risk.

And IF Brussels rule that the guarantee is illegal?

Well it might stop somebody building a theme park here.

Follow the story back

Corvera- Loans not yet formalised , click

Corvera Airport, Loans guaranteed

Govy offer Corvera financing lifeline