France, Spain Take Over High-Speed Railway as Operator Collapses

(Bloomberg) -- French and Spanish state rail companies will take control of a cross-border high-speed service after the private operator failed.

TP Ferro Concesionaria SA will be liquidated after efforts to restructure 557.2 million euros ($627 million) of debt collapsed, the company said in a statement on Thursday. Operations and employees will pass to a new venture formed by Spain’s ADIF and France’s SNCF Reseau, it said.

“The continuity of the railway service is guaranteed with the same levels of performance, safety and quality of service,” TP Ferro said.

The operator, controlled by Spain’s Actividades de Construccion & Servicios SA and Eiffage SA of France, has struggled since its formation in 2003. Europe’s economic slump damped business and leisure travel and delayed construction of infrastructure connecting the trans-Pyrenees service to existing transport links.

A proposal to restructure TP Ferro’s debt failed on Thursday because too few creditors attended a vote on the matter, the Llers, Spain-based company said. A court in Girona, Spain, will set the terms of the liquidation in a process which “should last some months”. The company owes 391.5 million euros to lenders, it said.

Distressed-debt investors Avenue Capital Group and BlueMountain Capital Management were among hedge funds that bought parts of TP Ferro’s debt at a 30 percent discount in 2014, two people familiar with the matter said at the time.