Benetton family confronts Italy’s populists over deadly bridge disaster

By BLOOMBERG

MILAN • The Benetton family vowed to fight the Italian government’s seizure of its road-toll assets in the wake of a deadly bridge collapse, in a confrontation between one of the country’s preeminent industrial dynasties and populist politicians demanding justice for a disaster that killed at least 39 people.

Investors in Atlantia SpA, the infrastructure company controlled by the family, faced dramatic losses after the accident rapidly flared into a political firestorm. Italian officials said late on Wednesday that they started the process to revoke the company’s road concession, while the company said it would protect shareholders and bondholders.

The finger-pointing and harsh political response has thrown the Benettons into fight to salvage their lucrative toll-road investment and protect their fortune amid rising anger within Italy.

Atlantia said yesterday that government officials’ decision to start the revocation process came prematurely, “without any verification of the material causes of the accident”.

The stock pared some of its losses after a senior Transport Ministry official said the initial move to revoke the toll-road concession of Atlantia’s Autostrade per l’Italia unit would be restricted to the stretch of highway in Genoa that contained the collapsed bridge.

Atlantia shares were down 16% as of 12:32pm yesterday in Milan, after earlier losing as much as 27%. Bonds mostly recovered after some fell to record lows.

Five Month Test
The government action could be suspended if Autostrade makes good on its promise to rebuild the bridge and related facilities within five months, said the official, who asked not to be named in line with internal policy. That could also lead to a deal in which Autostrade could keep the licence, the person said.

To revoke the licence, the government must prove serious negligence in maintenance, “which is not going to be straightforward”, said Giorgio Ragazzi, a professor of public finance at Bergamo University.

Atlantia said its contract requires Atlantia to be reimbursed if the concession is withdrawn, and said it will continue to support Autostrade “with the aim of protecting the interests of its shareholders and bondholders”.

Politicians in Italy have also called for the top management of Autostrade to resign, including Atlantia CEO Giovanni Castellucci.

People familiar with the matter said he retains the family’s backing and has no plans to step down.

Atlantia’s €1 billion (RM4.67 billion) of bonds due in July 2027 plunged below 87 cents on the euro yesterday, the lowest since they were issued, before bouncing back to 93 euro cents around midday, according to data compiled by Bloomberg. The €700 million of notes due September 2029 issued by Autostrade touched 88 cents on the euro, earlier, also a record low, and were trading at 94 cents.

The cost of insuring Atlantia’s debt with credit-default swaps soared 84 basis points yesterday to 258, the highest in almost six years, according to CMA. The Italian company has lost about €4.4 billion in market value since the deadly disaster happened around midday on Aug 14.

Late on Wednesday, Prime Minister (PM) Giuseppe Conte told reporters that the government will “start the procedure to revoke Autostrade’s licence”.

He said officials won’t wait for the outcome of a probe or a trial to take action.

Deputy PM Luigi Di Maio, speaking to Radio 24, confirmed the government’s move said Atlantia won’t be entitled to receive any compensation because it didn’t fulfil its duties with the highway.

“Di Maio can say what he wants about the state refusing to pay any indemnity for revoking the licence, but judges would make sure that he does,” Carlo Alberto Carnevale Maffe, professor of business strategy at Milan’s Bocconi University, said in an interview. “There is rule of law in this country.”

Bond Payments
If the highway-operating licence is revoked, the division’s creditors may have the option to accelerate repayment, Creditsights analysts wrote in a note on Wednesday, quoting the firm’s euro medium-term note prospectus. The analysts changed their recommendation on the debt to ‘Underperform’.

Morandi bridge, built in the 1960s, was part of a major artery connecting the Italian Riviera to the southern coast of France. It collapsed in a heavy rain on Tuesday, causing more than two dozen vehicles to drop to the railroad tracks about 150ft (45.7m) below.

The disaster occurred during the height of Italy’s summer travel season. Most companies, including Atlantia, are shut down during the Ferragosto week. The bridge’s failure and accompanying loss of life has shocked Italians and led to questions about the safety of hundreds of aging bridges and tunnels.

The Autostrade unit will hold an emergency board meeting early next week to evaluate the impact of the tra-gedy on its business and respond to government’s request, people familiar with the matter told Bloomberg News late on Wednesday.

Edidizione Srl, the Benetton family’s holding company, said it wi ll do “everything in its power to discover the truth and the responsibil it ies” for the Genoa disaster, while extending condolences to the families of the victims.

Edizione said Autostrade has invested over €10 billion in the last 10 years to widen and modernise the Italian highway network.