Autostrade Approves Initial $577 Million Fund for Genoa Tragedy

(Bloomberg) -- Atlantia SpA’s Autostrade per l’Italia unit approved an initial 500 million euros ($577 million) in funding to help victims of the Genoa bridge disaster and support the region, in its first official response after the Italian government started a formal process to revoke the company’s highway concession in the country.

The board agreed on a “first list of initiatives, preliminary worth 500 million euros, which will be self-financed,” Autostrade said in an e-mailed statement. The meeting, which began with one minute of silence to mourn the victims, also acknowledged a “letter of dispute”sent by the transport ministry. A further extraordinary meeting will make deliberations on the process, the company said.

Italy’s coalition government sent a formal dispute letter to the company dated Aug. 16, kicking off the process of ending the highway concession, after the collapse of the Morandi bridge in Genoa killed 43 people.

Prime Minister Giuseppe Conte stepped up pressure on Atlantia Tuesday, telling Corriere della Sera that the initial disaster relief offer was “certainly modest,” and that the company “could quadruple or quintuple that” to about 2.5 billion euros.

Replacing Bridge

Autostrade reiterated that it could replace the destroyed infrastructure within eight months with a new steel bridge. The company will stop charging tolls in the area until reconstruction is completed and it said it’s planning new roads to ease congestion.

Deputy Premier Luigi Di Maio, leader of the anti-establishment Five Star Movement, and Transport Minister Danilo Toninelli have been threatening to re-nationalize toll roads, run privately since the late 1990s, in response to the Aug. 14 bridge collapse. Di Maio’s coalition partners from the League party have been more circumspect. Cabinet Undersecretary Giancarlo Giorgetti, a League member, said Monday he’s “not convinced that state management of highways would be more efficient.”

Autostrade is the largest toll-road operator in Italy, controlling about half the country’s toll highways. According to its concession agreement, the government would have to compensate the company if it terminated the contract before its expiration in 2038, but penalties and damages could offset the amount due. Autostrade’s liabilities and assets would then be transferred to the government.

Indemnities would be around 10.8 billion euros net of a fixed 10 percent penalty, analysts at Mediobanca SpA including Nicolo Pessina estimated in a report published Tuesday. Di Maio has downplayed concerns, saying he doesn’t see any reason to pay compensation for early termination of the concession contract if the company was negligent.

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