Italy Weighs State-Lender Role in Takeover of Highway Concession
(Bloomberg) -- The Italian government is considering involving state lender Cassa Depositi e Prestiti SpA in a public takeover of the highway concession held by Atlantia SpA’s Autostrade per l’Italia following the Genoa bridge collapse, according to people familiar with the matter.
A role for CDP is just one potential option being weighed by Prime Minister Giuseppe Conte’s government, said the people, who asked not to be named discussing confidential matters. The plan, first reported by Bloomberg News on Tuesday, isn’t on the table of Italy’s finance ministry, a ministry official said.
One possibility is for CDP to eventually acquire a controlling stake in Autostrade, the people said. It’s unclear whether Atlantia’s Benetton family would be open to such a solution, or whether there have been any talks. Another option is to follow through with threats to revoke the concession following the Morandi bridge’s collapse last week, killing 43 people, and hand the contract to ANAS, the government’s road operator.
Deploying the CDP would offer the populist government a solution that meets pledges to allow the state to take over operations while stopping of short of full nationalization, a step that could unsettle investors already concerned at budget-busting rhetoric and Italy’s lukewarm commitment to the euro. The lender, whose holdings include stakes in energy company Eni SpA and Telecom Italia SpA, is controlled by the Italian treasury with an 83 percent stake.
Atlantia shares advanced as much as 2.3 percent on Wednesday, following the Bloomberg report. The CDP may buy up to 10 percent of Autostrade and gain “golden power” veto rights over the concession, Il Messaggero reported Wednesday. The CDP’s intervention is favored by Cabinet Undersecretary Giancarlo Giorgetti, La Repubblica reported. Conte and the Five Star movement, part of the ruling populist coalition, are pushing for a role for the CDP while Finance Minister Giovanni Tria is opposed, La Stampa reported.
The government sent a formal dispute letter dated Aug. 16, starting the process of taking away the contract following the bridge collapse last week. Conte stepped up pressure on Autostrade on Tuesday, telling Corriere della Sera newspaper that the company “could quadruple or quintuple” its initial disaster-relief offer of 500 million euros in aid to victims and the community, to about 2.5 billion euros.
Allianz SE and Silk Road bought a 12 percent stake in Atlantia’s Autostrade last year, valuing the business at about 14.8 billion euros, according to Mediobanca analysts. The remainder would be worth about 13 billion euros, based on the Mediobanca calculation.
Italian Deputy Premier Luigi Di Maio, leader of the anti-establishment Five Star Movement, and Transport Minister Danilo Toninelli have been threatening Atlantia with nationalization of Italian toll roads, privatized since the late 1990s. Di Maio’s coalition partners from the League party have been less strident. Giorgetti, the cabinet undersecretary, said Monday that he “is not convinced that state management of highways would be more efficient.”
Autostrade is the largest toll-road operator in Italy, controlling about half the market. According to its concession agreement, the government is obligated to compensate the company to terminate the contract before its expiration in 2038. The compensation would be calculated based on the net present value of expected cash flows until the end of the concession, net of costs, liabilities, investments and projected taxes, and excluding net financial debt which will be assumed by the guarantor. Italy would have to pay about 22 billion euros, according to Mediobanca analysts.
“Everybody is talking about the 20 billion-euro penalty the government will have to pay Autostrade if it revokes the concession, but I don’t think we have to pay any sum" given the bridge collapse, Di Maio told Radio 24 on Aug. 16.
Atlantia said in a statement after its board met on Wednesday that it had “begun assessing the effects of ongoing commentaries and dissemination of news about the company,” in order to provide “the best possible protection for the market and investors.” The company specified that it was also looking into the impact on its “financial instruments” of the letter of complaint sent by the Transport Ministry.
Atlantia reversed earlier gains and was falling 3.6 percent at 4:30 p.m. in Milan trading. Shares have fallen about 23 percent since the bridge collapsed on Aug. 14.
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