Benetton Family’s Atlantia to Confront Italy on Toll-Road Reform
Benetton Family’s Atlantia to Confront Italy on Toll-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 Dec. 22 they appeared unconstitutional and contrary to European Union 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 measures are confirmed. The government will make a final decision in January, Infrastructure Minister Paola De Micheli said in an interview with daily Corriere della Sera published Tuesday.
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 revise the contracts for what is a lucrative business. The disaster killed at least 43 people, angering the public and sparking tensions between Conte’s administration and the companies that run the nation’s deeply flawed roadways.
The measures proposed by the government will be more “fair and transparent” and won’t penalize operators of the concessions, Conte told Italian daily Il Messaggero in an interview.
Revoking Concession
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 lower the compensation due to Atlantia if the concession is revoked to about 7 billion euros, Corriere della Sera reported today.
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 4.9% in Milan trading on Monday, cutting the company’s market value to 17.3 billion euros. The Italian stock exchange is closed on Tuesday and reopens on Dec. 27.
Last month’s collapse of another operator’s highway bridge, albeit for seemingly different reasons, fanned the debate about the toll-road concessions and sparked tension within Conte’s fragile coalition.
Former premier Matteo Renzi, who recently split from the Democratic Party (PD) and formed a new movement, has said the government’s proposals would damage foreign investment in Italy.
Regional Affairs Minister Francesco Boccia, a member of the PD, disagreed with Renzi’s view. “International investors are welcome in Italy, they know they can work with a serious government asking for certainties,” he told reporters late Monday.
“The state has to assure that everyone plays by the rules, and whoever breaks the rules will have to pay the consequences,” Boccia said.
The government decree, which was provisionally approved after a seven-hour cabinet meeting on December 21, needs final agreement by parliament. The measures would make it easier and less costly for the government to terminate contracts with highway operators, according to a draft seen by Bloomberg News.
AISCAT, the toll-road operators’ association, which also represents Autostrade, strongly opposes the new rules, saying they might violate the Italian constitution. The measures contain serious risks for operators’ credit lines, the association said in a statement, adding that the companies’ survival could be at stake.
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.
Five Star
The measures lay “the foundation to revoke concessions,” Davide Crippa, the head of the Five Star Movement party in the lower house of Parliament, said in a statement. Five Star leader Luigi Di Maio has led the campaign for Autostrade’s concessions to be pulled ever since the 2018 collapse.
“There’s no alternative to revoking the concession,” Di Maio said in an interview with daily La Stampa published Tuesday. “The government is united on this and if someone has a different opinion I’m willing to listen to their reasons.”
According to the draft decree seen by Bloomberg, Italy’s state-owned operator, Anas SpA, would temporarily manage highways in the event of any revocation.
To contact the reporters on this story: Tommaso Ebhardt in Milan at tebhardt@bloomberg.net;Alberto Brambilla in Rome at abrambilla8@bloomberg.net;Sonia Sirletti in Milan at ssirletti@bloomberg.net
To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net, Dan Liefgreen, Marco Bertacche
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