Denver airport rating holds after P3 turmoil

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Denver International Airport will proceed with terminal renovations under a new contractor with its Fitch rating intact.

Fitch Ratings affirmed the airport's outstanding senior lien general airport revenue bonds at AA-minus and outstanding subordinate lien debt at A-plus after Denver terminated its $1.8 billion contract with a consortium known as Great Hall Partners.


“The termination election by the city should ultimately result in a compensation amount that will be sufficient to repay all outstanding project debt (together with accrued interest),” Fitch analyst Mario Angastiniotis wrote.

A $189 million issue of bonds in 2017 through the Wisconsin Public Finance Authority is expected to be redeemed per the project development agreement, Fitch said.

The P3 project bonds, rated at the time BBB-minus by S&P Global Ratings and BBB by Fitch, were to mature through 2049, backed primarily by progress payments to the company from the airport. The payments were expected to exceed $479 million.

“The termination of the project and subsequent repayment of the project debt will not have an impact on DEN's rating,” Angastiniotis said.

Denver is preparing to issue $120 million of private activity bonds to refund $150.5 million of series 2009A bonds, with an estimated $40 million in savings and $85 million to refund series 2016B bonds.

Airport officials announced Thursday that it had selected two firms to continue the terminal renovation.

Stantec was named lead design firm for the Great Hall Project and Hensel Phelps as the preferred construction manager/general contractor for Phase I of the Great Hall Project.

“Over the last several months, our transition teams have been working diligently to identify the best and most efficient way to proceed and to select key members of the new project team that will help us successfully deliver the Great Hall Project,” said Kim Day, the airport's chief executive. “When we announced the termination of our contract with Great Hall Partners in August, we said that we expected to select a new project team this fall. The selection of the lead designer and contractor is right on schedule and will allow us to begin construction in Q1 2020, as we committed to doing.”

Stantec and Hensel Phelps will begin assessing the site on Nov. 13, one day after Great Hall Partners vacates the site. The work hit a roadblock last year when Great Hall detected substandard concrete in the original pour for the terminal that opened in 1995. In the course of negotiations on how to proceed, Denver decided to pull the plug on the public-private partnership, the first in the airport’s history.

“As previously stated, DEN is committed to keeping the design and construction cost of the Great Hall Project at the original $770 million including contingency,” the airport said. “The total cost for Phase I has not yet been determined but will be finalized by Q1 2020 once the team has had an opportunity to refine the design and scope. Additionally, the total termination payment amount has not been finalized, but is not a factor in resuming construction which will begin Q1 2020.”

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Airport revenue bonds Public-private partnership Transportation industry Denver City & County Colorado
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