2.9 The Department informed the other participants in the process that they would provide additional investment in NATS only on the same terms as that made by the private sector. This was important because:
■ Matching additional private sector investment in NATS pound for pound, broadly reflected the existing split between public and private sector share capital;
■ Ensuring that the government's investment was on the same terms as the private sector would provide added assurance that the detailed terms are robust and strictly commercial; and
■ Demonstrating that the terms are strictly commercial protects government's investment against a challenge to the European Competition authorities on grounds of state aid.
2.10 The new investor in NATS, BAA plc, was selected following a competitive process run by NATS in consultation with the Government, the Airline Group and their respective advisers. A feature of the BAA and Government investment in NATS is that only £5 million of each investor's £65 million investment is in the form of pure equity. The rest is in the form of loan notes on which interest payments will rank before dividends to existing shareholders like the Airline Group. In addition the loan notes issued by NATS' regulated business will rank equally for interest payments with bank debt in most circumstances.