Italy, Autostrade exploring ways to resolve concession stand-off: sources

By Giuseppe Fonte and Francesca Landini

ROME/MILAN (Reuters) – The Italian government and Atlantia’s motorway unit are exploring ways to break a stand-off over the group’s road concession which some members of the ruling coalition want to revoke, two sources close to the matter said on Wednesday.

A senior government official said there were contacts with Autostrade per l’Italia and the office of Prime Minister Giuseppe Conte was overseeing the issue, which has turned into a hot potato for Rome’s fragile coalition government.

A second source close to the matter spoke of “smoke signals” between the government and the company which were keeping open a communication channel through third parties.

Autostrade declined to comment.

The anti-establishment 5-Star Movement, part of the ruling coalition, has made revoking Autostrade’s concession a priority, irking its centrist partner Italia Viva. The other main government party, the centre-left PD, has trod more carefully, appearing to favour a renegotiation of the concession terms.

Talks between Autostrade and the government fell through in November, when the parties failed to reach a compromise over a possible compensation payment and cuts to road tolls the government was requesting.

Autostrade has been under heavy pressure since a motorway bridge it operated in the northwestern city of Genoa collapsed in August 2018, killing 43 people.

Ahead of a decision on whether to revoke Autostrade’s motorway licence, the government recently passed measures that reduce compensation owed for the early termination of a contract if the concession holder is in breach of its obligations.

Citing the government’s move, on Wednesday credit rating agency Fitch downgraded both Atlantia and Autostrade below the investment grade threshold, following a similar action by Moody’s last week.

Atlantia said in a statement Fitch’s decision may trigger an early repayment request on 2.1 billion euros of Autostrade’s debt, guaranteed for the most part by Atlantia, forcing the group to draw on existing credit lines.

The ratings remain under watch for possible further downgrades, Fitch said, highlighting the “significant uncertainty on future developments ranging from a renegotiation to early termination of the Autostrade concession.”

(Reporting by Francesca Landini and Giuseppe Fonte; editing by Valentina Za, James Mackenzie and Cynthia Osterman)