Benettons’ Atlantia to Confront Italy on Toll-Road Reform
Atlantia Prepares to Confront Italian Government on Road Reform
(Bloomberg) -- The Italian government is on the verge of an outright battle with the company that operates more than half of the country’s aging toll roads.
After Prime Minister Giuseppe Conte’s administration provisionally approved rules on the revocation of highway concessions, operator Autostrade per L’Italia said late Sunday they appeared unconstitutional and contrary to European norms and would result in the “legal termination” of the concession agreement.
The company, a unit of the billionaire Benetton family’s Atlantia SpA, is threatening to give back its highway concessions if the reforms are confirmed. The cabinet will meet again Monday to discuss the matter, Corriere della Sera reported.
Without a change in the law, a termination of the concession could lead to Autostrade receiving a payout of about 20 billion euros ($22 billion), according to a note by JPMorgan Cazenove earlier this month. The new measures could halve the compensation due to Atlantia if the concession is revoked, Corriere della Sera reported.
Autostrade may risk bankruptcy, according to an internal note seen by Bloomberg News. The document says Autostrade would lack funds to pay back 10.8 billion euros of debt if the government revoked its motorway concession without compensation. A spokesman for Autostrade declined to comment on the document.
Atlantia declined 4.7% in Milan trading, giving the company a market value of 17.5 billion euros. Since a bridge collapsed 16 months ago near Genoa on a motorway operated by Autostrade, the Benetton family has been trying to head off government efforts to seize what is a lucrative business. The disaster killed at least 43 people, angering the public and sparking tensions between the government and the companies that run the nation’s deeply flawed roadways.
Last month’s collapse of another operator’s highway bridge, albeit for seemingly different reasons, served to fan the debate.
The decree, which was provisionally approved after a seven-hour cabinet meeting on Saturday and needs final agreement, would make it easier and less costly for the government to terminate contracts with highway operators, according to a draft seen by Bloomberg News. It could be used if the cabinet decides to go ahead in revoking the concession of Autostrade.
AISCAT, the toll-road operators’ association, which also represents Autostrade, strongly opposed the new rule, saying it might be against the Italian constitution. The measures hold serious risks for operators’ credit lines, the association said in a statement, adding that the companies’ survival could be at stake.
Five Star
The measures lay “the foundation to revoke concessions,” the head of the Five Star Movement party in the lower house of Parliament, Davide Crippa, said in a statement. Five Star leader Luigi Di Maio has pressed for Autostrade’s concessions to be pulled ever since the 2018 collapse.
Di Maio said Monday that the government wants to go ahead with the plan to revoke Atlantia’s toll-road concessions in Italy. “It’s not just the will of the Five Star Movement, but the whole government,” Ansa reported.
Former Premier Matteo Renzi’s party -- a junior member of the coalition -- opposed the new rules, however, saying the matter shouldn’t be decided in the end-of-year decree, according to an interview with La Repubblica. The decree shouldn’t be misused by “demagogues,” because that would hurt the confidence of international investors, he was cited as saying.
The decree includes “dispositions on highway concessions,” according to a draft of the document seen by Bloomberg. Italy’s state-owned operator, Anas SpA, would temporarily manage highways in the event of any revocation, the draft says.
The measures would also include changes in the way highway operators are compensated in the case of a revocation. The decree suggested companies would receive a sum based on the investments already made if they were found to be “non-compliant” in the revocation process.
--With assistance from Ian Fisher and Daniele Lepido.
To contact the reporters on this story: Tommaso Ebhardt in Milan at tebhardt@bloomberg.net;Alberto Brambilla in Rome at abrambilla8@bloomberg.net
To contact the editors responsible for this story: James Ludden at jludden@bloomberg.net, Andrew Blackman, Ross Larsen
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