BAA, the airports operator, has unveiled details of the £4.5 billion of new bonds that it hopes will be accepted by bondholders in place of their existing unsecured holdings.

The new bonds are backed by income from the three London airports and Heathrow Express.

The company, which operates seven British airports - Heathrow Gatwick, Stansted, Southampton, Glasgow, Edinburgh and Aberdeen, has about £12 billion in debts after it was taken over by Ferrovial, the Spanish infrastructure group two years ago.

Ferrovial has been trying to renegotiate more favourable interest payments on £10 billion of that debt for the past year.

BAA is keen to convince bondholders to agree to its plans. A recent £7.65 billion finance package from Citigroup, Royal Bank of Scotland, HSBC and Santander for airport redevelopment depends on the bond restructuring going ahead.

BAA has sweetened the deal for bondholders by increasing rates on the coupons by up to 0.7 percentage points. It is also offering a one-off payment equal to 0.25 percentage points to those who vote in favour of the deal before July 29.

It is expected that the bond ratings will rise as a result of the new terms.

BAA needs 75 per cent of bondholders in each of its nine tranches of bonds to agree to the deal so it can go ahead. If enough bondholders agree, the new bonds will be issued on August 14. While switching bondholders to the new deal will cost the operator money, the new secured structure is likely to make it easier to raise finance in the future. The six members of a special committee set up by the Association of British Insurers to look at the proprosals said that they would be recommending that ABI members vote in favour.

BAA has been affected by a series of problems recently, including the opening of Terminal 5. It has also run into opposition over its proposals to build a third runway at Heathrow and a second runway at Stansted.

The Competition Commission is also investigating whether BAA's stranglehold on the big British airports is limiting competition. The Commission is expected to report its provisional findings next month, which may recommend that some airports are sold.

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