Italy said to weigh state lender role in Autostrade takeover

The Italian government is considering involving state lender Cassa Depositi e Prestiti SpA (CDP) 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 nationalisation, 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% stake. Atlantia shares advanced as much as 2.3% yesterday, following the Bloomberg report. The CDP may buy up to 10% of Autostrade and gain “golden power” veto rights over the concession, Il Messaggero reported yesterday. The CDP’s intervention is favoured 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.

A view of the “A1 highway” property of Autostrade near Milan. State lender Cassa Depositi e Prestiti may buy up to 10% of Autostrade and gain “golden power” veto rights over the concession, Il Messaggero reported yesterday.

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 €500mn in aid to victims and the community, to about €2.5bn. Allianz SE and Silk Road bought a 12% stake in Atlantia’s Autostrade last year, valuing the business at about €14.8bn, according to Mediobanca analysts. The remainder would be worth about €13bn, 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 nationalisation of Italian toll roads, privatised since the late 1990s. Di Maio’s coalition partners from the League party have been less strident. Giorgetti, the cabinet undersecretary, said on 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 €22bn, according to Mediobanca analysts.

“Everybody is talking about the €20bn 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 August 16. Atlantia advanced 0.9% to €19.08 at 10:01am in Milan. The shares have plunged about 25% since the August 14 tragedy. The Italian company was holding an extraordinary board meeting later yesterday to evaluate the impact of the situation on its business.

Sources and photo-credits: Gulf Times, Bloomberg