Credit Crisis Crash Lands Midway Deal

Mayor Daley's dream of privatizing Midway Airport has run into trouble as the nation's credit crisis has pushed the deal back at least six months, if not indefinitely. The April 6 closing date for the deal has been canceled, while the privately owned Midway Investment and Development Company, LLC, or MidCo for short, tries to line up more financing for the deal. The city is negotiating with the consortium backing MidCo is made up of Citigroup (yes, that Citigroup) unit Citi Infrastructure Investors, YVR Airport Services Ltd and John Hancock Life Insurance Co. to line up financing for the $2.52 billion 99 year lease deal.

"The MidCo team has not been able to put together the combined package of equity and debt to come up with the $2.5 billion they are obligated to pay," a source told the Sun-Times. "The problem is the credit crunch that's effecting the availability of bank credit and the general decline in the stock market. Pension funds don't have as much money to invest. MidCo has been working hard. They are relatively close. ... They believe with more time, they can get there." Nevertheless, the Mayor's Office believes that a deal can still be reached.

If MidCo can't line up more equity investors or bank financing can't be lined up, the airport will remain under the city's control. The best part (for the citizens of Chicago) of the deal falling apart is that if MidCo can't come up with additional financing, the city keeps the $126 million that the consortium has already put up.