1 June 2006

Gros Pietro’s answers

Saturday 27 May Gros-Pietro, the President of Autostrade was interviewed by the journalist Massimo Mucchetti for il Corriere della Sera.

However, my comment on the interview is positive because it allows the citizens and the Autostrade shareholders to have a more complete idea about the possible merger with the Spanish company Abertis.

But I would like to pick up on some of the questions asked by Mucchetti and I would like to ask for more complete and structured answers designed not for an audience of ministers but for the audience of all Italians who want to know about the merger in greater depth. Below I’m publishing Mucchetti’s questions and Gros Pietro’s replies.

“ MM: The merger with Abertis changes the assets. But on 18 November 2002, you assured ANAS that the control of the concessionary would remain with Schema28, and that is with Benetton and partners.

Gros-Pietro: That letter was not a commitment. It was useful to explain the effects of the company restructuring. Following the Tender Offer. Anyway we didn’t indicate a deadline.

MM: Without which that assurance would be intended for the whole leght of concession?
Gros-Pietro: It would be an unacceptable limitation on the right to ownership. If the State imposes conditions, they must write them out. The post privatisation lock-up was for 36 months, not an infinite time.

MM: Construction companies and Fiat were excluded from the competition for Autostrade. With the merger, however, the industrial partner will be the construction company Florentino Perez.
Gros-Pietro: The exclusion of the construction companies was imposed by the European Union, as a guarantee of the regularity of the competition for contracts for the work on the "Variante di valico". Now that that work has started, that reasoning has less validity.
On the other hand, the Italian Government has nothing against the presence of construction companies in motorway concessionaries: the Spanish Ferrovial is in the new Cremona-Mantova, Gavio is in the Asti-Cuneo, Toto is with us in the Autostrada dei Parchi.

MM: With the Tender Offer of 2003, you unloaded 8,000,000,000 of debts onto the concessionaries. This was done, not to develop the business, but to increase the income of the partners. The banks imposed conditions on additional investments. What changes with the merger?
Gros-Pietro: By substituting a part of the equity with low cost debts, we have reduced the cost of capital. With the merger, the ratio of the commitments (existing debts and investments to be done) and the gross margin, goes down from 8.4 to 8 and it decreases more rapidly after that.
...

MM: Why did you conclude the agreement when Italy had no Government in the fullness of its powers thus giving the impression of a “done thing”?
Gros-Pietro: According to Spanish law, the shareholders meeting for the merger must be held within 6 months of the approval of the last certificated accounts, thus by 30 June. We had to be quick.
...

MM: Autostrade had a rate of return on the investments of 11%. That is really high considering the low industrial risk. The new Pedemontana Lombarda is not starting because the return on project financing is 7%...
Gros-Pietro: We could even bring it down to below 11% if the political system could manage to reduce times and risks of the new work. These are the real problems, not the nationality of the companies.”
The responses given are evasive or not relevant. However it is important that they are complete and exhaustive if the merger with Abertis is to be authorised.

Posted by Antonio Di Pietro in Economy