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Capital Airports Holding Co (CAH), China's largest airport company, is mulling a series of financing plans after aggressive expansion last year.
The company plans to raise 6 billion yuan (US$741 million) by issuing corporate bonds and another 6 billion yuan through a domestic public listing in the next three years, said Li Peiying, CAH president.
CAH is also trying to attract strategic investors to manage its non-core businesses such as hotels, restaurants, shops and advertising, Li said.
CAH controls 16 Chinese airports and has stakes in another four airports. Last year alone, the company acquired seven airports; and currently has total assets of 67 billion yuan (US$8.3 billion).
Li made the remarks yesterday after receiving a 500-million-euro (US$625 million) loan from the European Investment Bank (EIB).
The loan is the largest ever granted by the EIB in Asia and the agreement was signed during the eighth China-EU Summit held on Monday.
Li said the loan would finance the ongoing expansion of Beijing Capital International Airport, which needs a total investment of 20 billion yuan (US$2.5 billion).
"This is a landmark agreement," Li said. "It only took us eight months to reach a deal, while getting loans from the World Bank or the Asian Development Bank usually takes much longer."
With a 25-year repayment period, the loan carries an interest of 3 per cent.
Li said the loan presents "the lowest costs" for CAH as borrowings from commercial banks usually have a shorter repayment period and interest rates of over 5 per cent.
EIB is the only foreign lender in the Beijing airport expansion project.
"This project features significant and feasible mutual interest for China and Europe," said Philippe Maystadt, EIB president.
"It is a national priority for China to meet rising demand for air travel. It also facilitates better connectivity between China and Europe."
Maystadt declined to reveal the extent of European companies' involvement in the airport expansion project, but said: "We don't enforce special conditions (for the project), but there is significant European interest in this project."
Two years ago, the coalition of Dutch airport planner NACO, architects Foster and Partners, and engineers ARUP won the design bid for Terminal 3 of the Beijing airport.
Construction of Terminal 3 started in March last year and when the project is completed at the end of 2007, the enlarged airport will be able to handle 60 million passengers a year, almost double the current capacity of 35 million passengers.
Li said the new terminal will serve Air China, the nation's flagship carrier, and foreign airlines. Other Chinese air carriers flying on both domestic and overseas routes will use the existing two terminals.
The airport expansion is regarded as a key project in the run-up to the 2008 Beijing Olympic Games as millions of visitors are expected.
The nation's busiest airport was expanded twice since the reform and opening up.
EIB has helped finance three other projects in China since 1995 - oil and gas development in Pinghu, Zhejiang Province; a drinking water treatment plant in Chengdu, Sichuan Province; and an expressway near the border between the Guangxi Zhuang Autonomous Region and Viet Nam.
"We are looking forward to financing other investment projects in China, projects that present this scale of mutual interest for China and Europe," Maystadt said.
(China Daily September 7, 2005)
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