Aer Lingus : 08 Nov 11 - Completion of surrender of Aer Lingus Head Office site

ISE: EIL1 LSE: AERL

25 June 2010 that it had signed a Heads of Agreement with DAA in relation to the transaction.
The HOB Site comprises approximately 9.9 acres located at Dublin Airport. It includes the Head Office Building, which is the corporate headquarters of the Company and its subsidiaries (the "Group") where a large number of its employees and operational and administrative functions are currently located, together with car parking spaces. Iolar House and the Mock-Up Building, which comprise office space and training facilities for the Group's crew, are also located on the HOB Site. The HOB Site also includes the ALSAA swimming pool and several other smaller buildings and structures.
As a result of the "Greenfield" cost reduction programme combined with the additional office accommodation available in Hangar 6, Aer Lingus now has excess accommodation at Dublin Airport and is therefore seeking to consolidate its real estate portfolio. The Head Office Building is over 40 years old and is in need of refurbishment to meet the Group's requirement for a modern and efficient office facility. Following completion of the surrender, Aer Lingus employees, administrative and support services currently based in the Head Office Building will re-locate to Hangar 6 and another DAA property in Dublin Airport. As a result, the transaction will achieve a cost effective consolidation of the Group's real estate portfolio at Dublin Airport in a manner that will also improve operational efficiency.
The value of the consideration payable by DAA to Aer Lingus for the surrender is €22.15 million plus interest payments. This includes a payment of €10.55 million over a period of ten years in equal annual payments, to which an interest rate of 5% per annum applies. Aer Lingus has exercised an option to apply this payment in prepayment towards rent and licence fees payable by Aer Lingus to DAA in respect of other property leases (including the Terminal 2 accommodation and the licence for Hangar 6).
In addition, non-cash consideration of €11.60 million will be provided by DAA to Aer Lingus over a ten year period. This non-cash consideration comprises credits in certain fees and rents payable by Aer Lingus to DAA in addition to the granting of a licence to Aer Lingus to occupy certain property owned by DAA. Separately, Aer Lingus has made a cash payment to DAA of €1.0 million on completion of the transaction in full and final settlement of any obligation which Aer Lingus may have to DAA in respect of the condition of the HOB Site.
The net book value of the HOB Site recognised in the Group's financial statements at 30 June
2011 was €0.16 million.
Aer Lingus will continue to occupy the Head Office Building under a short term license from DAA to allow the Group to transfer to the new office accommodation noted above in an organised and structured manner.
ENDS

matthew.fletcher@powerscourt-group.com