Atlantia
CDP Expected to Pay €3B-€4B for 33% ASPI Stake; Benetton Family Holdco Edizione May Be Left With 11% of ASPI Shares Before IPO; Process Should Be Finalized in 6 Months
Thu 07/16/2020 08:32 AM
Relevant Documents:
Government Announcement (in Italian)
Autostrade per l’Italia-ANAS Concession Agreement
Milleproroghe Decree (art. 35)
Government-backed Cassa Depositi e Prestiti, or CDP, is expected to buy a 33% equity stake in the new Autostrade per l’Italia, or ASPI, through a reserved capital increase, after the deal reached yesterday, according to sources and press agency Radiocor. CDP would pay between €3 billion and €4 billion for the 33% stake. ASPI’s equity value at the time fund Silk Road and Allianz bought minority stakes in the business in 2017 was €14.8 billion. Currently, Atlantia’s market capitalization is €11.6 billion.
The agreement reached in the early hours of July 15 is the conclusion of a two-year process triggered by the collapse of the Morandi bridge in Genoa, which killed 43 people in August 2018.
An assumed €3.5 billion investment by CDP for a 33% stake in ASPI would value the business at €10.5 billion, while the value attributable to current ASPI shareholders would be €7 billion, split between Atlantia, Allianz and Silk Road with 88.06%, 6.94% and 5% respectively. After the entry of CDP, these would be diluted to 58.7% of ASPI owned by Atlantia, 4.6% by Allianz and 3.3% by Silk Road.
Subsequently, Atlantia would sell a 22% stake in ASPI to one or more institutional investors, according to yesterday’s government notice. The 22% stake would correspond to roughly €2.3 billion based on the €10.5 billion valuation. After this transaction, Atlantia would own 36.7% of ASPI, and won’t be allowed to distribute any dividends from the disposal proceeds.
Finally, ASPI would be spun off from Atlantia and listed on the stock exchange. Each Atlantia shareholder would receive a portion of ASPI shares and could decide whether to sell them in the market or purchase more. The Benetton family’s holding company Edizione, which owns 30.25% of Atlantia, should end up with about 11% of ASPI’s shares, which would amount to about €1.1 billion assuming the ASPI valuation of €10.5 billion.
The whole process should be finalized in about six months, government officials said. Based on the current shareholder structure of Atlantia, the stakes in the “new” ASPI would be:
Ultimately ASPI’s valuation will depend on the new regulatory framework introduced by the transport regulatory authority (ART), which consists of a maximum annual tariff increase of 1.75% and includes investments of €14.5 billion in the motorways network.
According to press reports, ASPI’s €3.3 billion bonds guaranteed by Atlantia could in the future be guaranteed by the new ASPI stakeholders.The ASPI notes do not appear to currently contain any explicit change of control provisions, which would require them to be paid before maturity, once the transfer to the CDP takes place. Noteholders’ rights of repayment against ASPI will remain.
An alternative to the above mentioned deal, according to the government, would see Atlantia selling its 88% stake in ASPI to CDP as well as institutional investors, despite what the company said at the beginning of the week.
Background
The ASPI-government agreement also includes compensatory measures amounting to €3.4 billion from ASPI, as previously reported, an alignment of the 2007 Concession Agreement clauses for a possible concession revocation to those outlined in the December Milleproroghe decree, enhanced controls for the concessionaire and increased penalties even in the event of minor violations by the concessionaire.
It also consists of an acceptance of the new tariff discipline introduced by the transport regulatory authority, significantly moderating the tariff dynamics, and a renunciation of all the legal disputes regarding the reconstruction of the Morandi bridge and the new tariffs regime.
According to Atlantia, ASPI contributed about 51% of the group’s EBITDA in 2019, if adjusted for remaining concession life and interest.
As reported, the Milleproroghe decree, which was approved at the end of 2019, unilaterally changed the legal framework for motorway concessionaires and established that compensation for ASPI in case of a concession revocation would be cut to between €7 billion and €10 billion from the originally envisaged €23 billion.
ASPI previously said the Milleproroghe decree could not be applied retroactively and was calling for a review of its early termination clause, which says that a potential concession revocation does not require the immediate compensation of the concessionaire. The company said an indemnification should have been based on the fair market value of the asset and that the effective termination needs to take place only upon payment of the indemnification.
Atlantia's capital and corporate structure is HERE.
--Luca Rossi, Karoliina Hienonen
Government Announcement (in Italian)
Autostrade per l’Italia-ANAS Concession Agreement
Milleproroghe Decree (art. 35)
Government-backed Cassa Depositi e Prestiti, or CDP, is expected to buy a 33% equity stake in the new Autostrade per l’Italia, or ASPI, through a reserved capital increase, after the deal reached yesterday, according to sources and press agency Radiocor. CDP would pay between €3 billion and €4 billion for the 33% stake. ASPI’s equity value at the time fund Silk Road and Allianz bought minority stakes in the business in 2017 was €14.8 billion. Currently, Atlantia’s market capitalization is €11.6 billion.
The agreement reached in the early hours of July 15 is the conclusion of a two-year process triggered by the collapse of the Morandi bridge in Genoa, which killed 43 people in August 2018.
An assumed €3.5 billion investment by CDP for a 33% stake in ASPI would value the business at €10.5 billion, while the value attributable to current ASPI shareholders would be €7 billion, split between Atlantia, Allianz and Silk Road with 88.06%, 6.94% and 5% respectively. After the entry of CDP, these would be diluted to 58.7% of ASPI owned by Atlantia, 4.6% by Allianz and 3.3% by Silk Road.
Subsequently, Atlantia would sell a 22% stake in ASPI to one or more institutional investors, according to yesterday’s government notice. The 22% stake would correspond to roughly €2.3 billion based on the €10.5 billion valuation. After this transaction, Atlantia would own 36.7% of ASPI, and won’t be allowed to distribute any dividends from the disposal proceeds.
Finally, ASPI would be spun off from Atlantia and listed on the stock exchange. Each Atlantia shareholder would receive a portion of ASPI shares and could decide whether to sell them in the market or purchase more. The Benetton family’s holding company Edizione, which owns 30.25% of Atlantia, should end up with about 11% of ASPI’s shares, which would amount to about €1.1 billion assuming the ASPI valuation of €10.5 billion.
The whole process should be finalized in about six months, government officials said. Based on the current shareholder structure of Atlantia, the stakes in the “new” ASPI would be:
Ultimately ASPI’s valuation will depend on the new regulatory framework introduced by the transport regulatory authority (ART), which consists of a maximum annual tariff increase of 1.75% and includes investments of €14.5 billion in the motorways network.
According to press reports, ASPI’s €3.3 billion bonds guaranteed by Atlantia could in the future be guaranteed by the new ASPI stakeholders.The ASPI notes do not appear to currently contain any explicit change of control provisions, which would require them to be paid before maturity, once the transfer to the CDP takes place. Noteholders’ rights of repayment against ASPI will remain.
An alternative to the above mentioned deal, according to the government, would see Atlantia selling its 88% stake in ASPI to CDP as well as institutional investors, despite what the company said at the beginning of the week.
Background
The ASPI-government agreement also includes compensatory measures amounting to €3.4 billion from ASPI, as previously reported, an alignment of the 2007 Concession Agreement clauses for a possible concession revocation to those outlined in the December Milleproroghe decree, enhanced controls for the concessionaire and increased penalties even in the event of minor violations by the concessionaire.
It also consists of an acceptance of the new tariff discipline introduced by the transport regulatory authority, significantly moderating the tariff dynamics, and a renunciation of all the legal disputes regarding the reconstruction of the Morandi bridge and the new tariffs regime.
According to Atlantia, ASPI contributed about 51% of the group’s EBITDA in 2019, if adjusted for remaining concession life and interest.
As reported, the Milleproroghe decree, which was approved at the end of 2019, unilaterally changed the legal framework for motorway concessionaires and established that compensation for ASPI in case of a concession revocation would be cut to between €7 billion and €10 billion from the originally envisaged €23 billion.
ASPI previously said the Milleproroghe decree could not be applied retroactively and was calling for a review of its early termination clause, which says that a potential concession revocation does not require the immediate compensation of the concessionaire. The company said an indemnification should have been based on the fair market value of the asset and that the effective termination needs to take place only upon payment of the indemnification.
Atlantia's capital and corporate structure is HERE.
--Luca Rossi, Karoliina Hienonen
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