China Merchants Talks for Turkish Bridge Deal Hit Delays

(Bloomberg) -- Astaldi SpA’s talks to sell its stake in an Istanbul bridge project to a Chinese consortium have been delayed amid arguments over toll charges, according to four people with knowledge of the matter.

Astaldi and its Turkish partner IC Yatirim Holding AS have been negotiating with a group of Chinese investors led by China Merchants Group. The talks have centered on the cash-strapped Italian builder selling its 33 percent stake in the venture, with IC Yatirim also potentially selling part of its share. The negotiations had already been held up by Turkey’s economic crisis last summer.

All the parties to the bridge-sale talks have demanded that the government adjust the exchange rate used to calculate the toll four times a year, instead of the current once a year, the people said, asking not to be identified discussing private information. This is to limit exposure to fluctuations in the lira, particularly after its drop to a record low, they said. Astaldi values its stake, including equity and a shareholder loan, at about 350 million euros, according to a May investor presentation.

Another option is for Astaldi to sell its stake to IC Yatirim, its partner in the project, though those negotiations have also stalled, two of the people said.

Rome-based Astaldi has been hit hard by a slump in Italy’s construction sector and entered special administration after a re-capitalization plan failed. The company is trying to sell assets wherever it can to raise cash, and is separately looking at the possible sale of a Turkish road venture it’s involved in.

Astaldi, IC Yatirim and China Merchants Group declined to comment, while Turkey’s roads authority didn’t respond to calls seeking comment.

Astaldi has been counting on cash from the bridge sale to fulfill its pledge to investors to increase capital and repay debt. Italy’s second-largest builder was forced to file for credit protection on 2.5 billion euros ($2.9 billion) of borrowings after Turkey’s economic crisis plunged markets into turmoil in August and held up the sale.

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