Midway Lease Deal In Trouble

Investors miss deadline

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    NEWSLETTERS

    TK
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    Daley's deal goes back to the hangar.

    Given the way parking meter privatization is working out so far, this may be a good thing:

    "Privatization of Midway Airport has hit another snag after an investor group failed to meet Monday’s deadline to complete the deal," Crain's reports.

    On Tuesday, the city gave the investor group, called the Midway Investment and Development Company, another two weeks to come to terms on a six-month extension the group says it needs to "raise the money amid disarray in financial markets."

    The six-month extension itself is the subject of negotiation. "Officials won’t explain the reason for the hang-up, but presumably the city wants to be compensated or protected in some way if it gives MidCo six more months to complete the deal," Crain's reports.

    Midway Investment is a partnership between the John Hancock Life Insurance Co., Citi Infrastructure and Vancouver Airport Servicess.The group won the right to lease Midway from the city for 99 years for $2.52 billion. If the investors can't put the money together, the city gets to keep the group's $126 million deposit - and it can put the lease proposal out to bid again.

    "The market was already tough when we did [this deal], but the stock market has fallen about 35 percent since the bidding in late September, so it's even tougher," John Schmidt, an old Daley hand who advised the city on the deal as a lawyer at Mayer Brown, told The AmLaw Daily. "But it's not just the debt financing. It's also the equity crunch, which is created by the fact that what looked like a good deal in September doesn't look quite as good now compared with the falling prices of other airports."

    Or not. According to Flightglobal, Midway would become the nation's second privatized airport but the first one still around. The Port Authority of New York and New Jersey bought back Stewart International, in Newburgh, New York, after leasing the airport didn't work out.

    Steve Rhodes is the proprietor of The Beachwood Reporter, a Chicago-centric news and culture review.