December 7, 2021

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Italy Moves to Take Over Road Operator in Benetton Exit Plan

(Bloomberg) — Italy moved to nationalize the company that operates the country’s highway network in the highly-charged fallout from a deadly bridge collapse.

The billionaire Benetton family — the target of public blame for the disaster — is set to exit ownership of toll-road operator Autostrade per l’Italia SpA under the plan. Following all-night talks, Prime Minister Giuseppe Conte’s cabinet agreed to pursue the last-minute proposal while still threatening to revoke the company’s operating contracts.

The collapse of the 1960s-era Morandi Bridge in Genoa remains a vivid national tragedy, killing 43 people in August 2018 as cars and trucks plunged onto rail tracks and streets below. A ministerial commission argued that Autostrade underestimated the deterioration of the structure. The company rebuffed those claims, and the standoff had tested the stability of Italy’s government.

“We will have fairer and more transparent tolls, more efficiency, more checks and a safer system,” Conte said in a post on Facebook after a seven-hour cabinet meeting fueled by hamburgers, pizzas and croissants. “Public good won over consolidated private interests.”

The political stakes for Conte have been high. Canceling Autostrade’s highway contracts would have opened up the country to a potential multi-billion-euro lawsuit. At the same time, failing to adequately penalize the company and its owners over the disaster risked costing him the support of the Five Star Movement, the biggest party in his coalition.

Autostrade Spinoff

The deal foresees the gradual exit of the Benettons from Autostrade through a capital increase taken up by state lender Cassa Depositi e Prestiti SpA as well as direct sales of shares to investors. The company will then be spun off from its parent company Atlantia SpA and listed on the stock exchange. As an alternative, Atlantia could sell its stake in Autostrade directly to Cassa Depositi and institutional investors.

Italy’s economy and infrastructure ministers were asked to hammer out the details. If the agreement isn’t fully implemented, the government will revoke Autostrade’s contracts to operate toll roads in Italy, the cabinet said in a statement on Wednesday.

The threat of revocation will remain on the table until a deal is finalized, Luigi Di Maio, a senior Five Star figure and foreign minister, said in a Facebook post.

The government must ensure that if Autostrade is listed, “it must not be subject to market logic, but works to ensure investments and lower highway tolls,” he wrote, adding that Cassa Depositi “must bring with it healthy investors who have at heart the future of our infrastructure networks.”

The Benettons will lose control of Autostrade by the end of September, while the family’s complete exit and the entry of the Italian state will require a year-long process, Economic Development Minister Stefano Patuanelli said to Italian news agency ANSA.

3,000 Kilometers

Created as part of Italy’s post-war reconstruction, Autostrade operates more than 3,000 kilometers (1,800 miles) of highways, which are funded by tolls on cars and trucks. The company is 88% owned by Atlantia, with small stakes held by Allianz SE and China’s Silk Road.

The future of Autostrade and its owner was at stake in the dispute. If it lost its operating contracts, the road operator had warned it could default on debt, which would in turn threaten Atlantia — the world’s biggest toll-road operator after its 2018 acquisition of rival Abertis.

The proposal is “very positive news” for Atlantia, Marco Opipari, an analyst at Fidentiis Equities, said in a note. “At this point it is clear that the government is willing to reach an agreement.”

Autostrade’s bonds due 2023 gained the most on record on Wednesday, rising 7.5 cents on the euro to 98 cents, the highest level since February, according to data compiled by Bloomberg.

Since the bridge drama, Atlantia lost more than 50% on the Milan stock exchange, with a value of 9.5 billion euros ($10.8 billion) as of the close on Tuesday. The shares jumped as much as 26% on Wednesday.

Under the plan, Autostrade would pay compensation of 3.4 billion euros related to the bridge collapse. The deal includes a reduction of tolls, increased penalties for further safety violations and an agreement to waive legal claims related to the reconstruction of the bridge.

Conte’s coalition was split over how to deal with the Benettons. Five Star had insisted on revoking the operating contracts or a full Benetton exit from Autostrade, while the center-left Democratic Party wanted the state to take a stake in the company.

(Updates with Conte comment in fourth paragraph)

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