MILAN, Oct 5 (Reuters) – More than two years after a bridge collapse killed 43 people in Genoa, the Italian government is threatening to strip Atlantia’s ATL.MI Autostrade per l’Italia of its lucrative concession to run much of Italy’s motorway network.
The dispute seemed to have been resolved in July when the government approved a plan that would see Atlantia pull out of Autostrade to make room for state lender CDP.
But that agreement risks unravelling, after talks with CDP stalled, prompting the Benetton-backed group to launch a competitive sale process for Autostrade.
WHY DID THE JULY AGREEMENT NOT STICK?
Under the plan brokered by the government on July 14, CDP was expected to cooperate with Atlantia on the spin-off of its 88% stake in Autostrade to secure control of the business along with allied investors.
The deal, however, did not fully address the financial details and was subject to the approval of minority investors both in Atlantia and Autostrade, who are now digging in their heels.
WHAT IS AT STAKE?
Autostrade is considered the crown jewel of the Atlantia portfolio, accounting for around one third of the group’s core profits before the bridge disaster.
Should its concession be terminated, Autostrade bondholders can decide to ask for early repayment of more than 7 billion euros ($8.2 billion) of bonds. This could lead to the default of the company, which employs 7,000 people.
Allianz ALVG.DE, Silk Road and EDF – which bought 12% of Autostrade in 2017 in a deal valuing it at nearly 15 billion euros excluding debt – could book a loss.
On the political side, Prime Minister Giuseppe Conte and the 5-Star Movement, who saluted the July 14 accord as a victory of the ruling coalition over the Italian business establishment, risk a blow to their reputation.
WHAT ARE THE MAIN STUMBLING BLOCKS?
CDP wants Atlantia to set aside assets to cover against future damage claims that Autostrade may be asked to foot as a result of the bridge disaster. Atlantia counters it has already agreed to pay 3.4 billion euros by way of a settlement.
CDP and Atlantia also disagree on the option of Atlantia shedding several billion euros of debt, bundling it into the motorway company that will be sold to the state lender.
Atlantia also disputes a government demand that it must sell control to CDP as a pre-requisite for lifting the threat of licence revocation. Atlantia has lodged a complaint with the European Union on this issue.
WHAT ARE THE NEXT KEY DATES?
Atlantia will hold a board meeting on Oct. 8.
The government is expected to take a decision on whether to restart the revocation process by Oct. 10.
An Atlantia shareholder meeting on Oct. 30 will vote on a dual track process to spin off or sell 88% in Autostrade.
WHAT ARE THE POSSIBLE OUTCOMES?
CDP and Atlantia find a compromise on future damage claims and debt and officially sign off on the July 14 deal, with the state lender taking control of Autostrade.
Talks collapse and the government restarts the revocation process, triggering a legal battle with Atlantia. Rome has already drafted an emergency decree to put Autostrade under temporary administration, a government source said.
Talks collapse but the government allows Atlantia to press on with its plan to spin off or sell its motorway assets to investors other than CDP.
($1 = 0.8506 euros)
(Reporting by Francesca Landini; Editing by Keith Weir and Mark Potter)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.