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Corporación América Airports Announces Recent Development
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Corporación América Airports S.A. (NYSE: CAAP) announced a recent development regarding an arbitration procedure against the Government of Peru related to the termination of a concession agreement for the new Chinchero International Airport. The ICSID Arbitral Court awarded damages of US$91,205,056 to Kuntur Wasi, in which CAAP holds 50% of the shares. The company will continue to provide updates on the matter.
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The decision by the International Centre for Settlement of Investment Disputes (ICSID) in favor of Sociedad Aeroportuaria Kuntur Wasi S.A. and by extension Corporación América Airports S.A., represents a significant legal victory in the arena of international arbitration. This resolution not only underscores the importance of adhering to contractual obligations but also reaffirms investor rights under concession agreements. The award of over $91 million compensates for the abrupt termination of the concession by the Government of Peru, which was deemed not justified by public interest. From a legal standpoint, this outcome may bolster the perception of CAAP as being capable of protecting its investments through international legal channels, potentially improving its risk profile for investors. However, it's important to consider the broader implications such as the potential for creating tensions between the company and the host government, which could affect future contracts or negotiations in the region.
The arbitration award of $91.2 million in favor of Kuntur Wasi, with a 50% stake held by Corporación América Airports, will likely have a positive impact on the company's financials. This inflow can strengthen the balance sheet, improving liquidity and potentially be used for debt reduction or reinvestment into other projects. Yet, investors should remain cognizant of the time value of money, considering that the dispute began in 2018; the sum awarded includes interest up to February 2024, which partially offsets the prolonged period during which the funds were tied up. The award might also lead to a favorable one-time effect on the company's earnings per share (EPS). Nonetheless, it's critical to analyze the company's overall performance and not just a one-time gain when contemplating the sustainable growth and profitability of CAAP.
Arbitration Procedure Against the Government of Peru Final Award Determined by ICSID
LUXEMBOURG--(BUSINESS WIRE)--
Corporación América Airports S.A. (NYSE: CAAP), (“CAAP” or the “Company”), one of the leading private airport operators in the world, announced today the following recent development related to the arbitration procedure request submitted by Sociedad Aeroportuaria Kuntur Wasi S.A. (“Kuntur Wasi”, in which CAAP holds 50% of the shares) to the competent authority, ICSID (known as CIADI in Spanish), in June 2018, in connection with the unilateral decision of the Government of Peru to terminate the concession agreement for the new Chinchero International Airport.
On May 9, 2024, Kuntur Wasi received notification from the ICSID Arbitral Court of the award (ICSID Case No. ARB/18/27) regarding the arbitration procedure on the case Sociedad Aeroportuaria Kuntur Wasi S.A. and Corporación América S.A. v. Republic of Peru. The Tribunal decided, among other things that “Peru breached the Concession Contract by terminating it without a well- founded reason of public interest". Furthermore, “the Tribunal orders that damages in the amount of US$91,205,056 (including interest to 28 February 2024) should be paid to Kuntur Wasi, together with any additional interest that has accrued at the rate established in this award to the date of payment; compounded annually”. The Company will provide any further updates on the matter as appropriate.
About Corporación América Airports
Corporación América Airports acquires, develops and operates airport concessions. The Company is one of the leading private airport operators in the world, currently operating 52 airports in 6 countries across Latin America and Europe (Argentina, Brazil, Uruguay, Ecuador, Armenia and Italy). In 2023, Corporación América Airports served 81.1 million passengers, 23.7% above the 65.6 million passengers served in 2022 and 3.6% below the 84.2 million served in 2019. The Company is listed on the New York Stock Exchange where it trades under the ticker “CAAP”. For more information, visit http://investors.corporacionamericaairports.com
