January 13, 2020 / 5:05 PM / a month ago

Atlantia names new CEO as tollway concession worries grow

MILAN (Reuters) - Italy’s Atlantia (ATL.MI) picked a veteran manager from its main shareholder as its new chief executive on Monday amid growing worries over the fallout from a deadly bridge collapse that threatens its motorway unit and alarms foreign investors.

The infrastructure group appointed Carlo Bertazzo, from the Benetton family holding company as chief executive.

Bertazzo will have to deal with mounting pressure from part of Italy’s governing coalition to strip Atlantia’s motorway unit Autostrade per l’Italia of its concession following the bridge disaster, which killed 43 people in the northern city of Genoa in 2018.

Ratings agency Standard and Poor’s cut the long- and short- term ratings of both Atlantia and Autostrade, along with other subsidiaries, warning that a decree passed at the end of last year made it easier to revoke the concession.

It said revoking the concession would have “difficult-to-predict liquidity and legal consequences for Autostrade and Atlantia,” which are carrying billions of euros in debt. Revocation would likely also result in prolonged litigation.

The so-called Milleproroghe decree also considerably reduces the amount the government must pay to a toll road company if a concession is revoked due to shortcomings on the part of the operator. S&P said this “significantly increases the risk of a shortfall in liquidity” for both Autostrade and Atlantia.

Autostrade said on Dec. 22 the rule risked being in breach of both the Italian constitution and European law if it resulted in retroactively changing the concession contract by one of the parties involved.

According to two sources with knowledge of the matter, some foreign investors in Atlantia have written to top European Commissioners with concerns against the rule, saying the decree “utterly undermines regulatory predictability.”

German insurer Allianz (ALVG.DE), French energy group EDF and Chinese fund Silk Road are investors in Autostrade per l’Italia, while Lazard Asset Management, HSBC Holdings and Singapore sovereign fund GIC have minority stakes in Atlantia.

The appointment of Bertazzo, who has worked for 25 years for Edizione, the Benetton family holding company, suggests continuing support for Atlantia from its main shareholders.

Prior to his appointment, sources with knowledge of the matter said the board had planned to appoint two CEOs, one to take charge of Italian operations and the other to oversee the group’s foreign businesses.

A statement from Atlantia late on Monday said a second CEO would be appointed in coming months to take charge of foreign operations, but the company later said that statement had been sent in error and was wrong.

Additional reporting by Stephen Jewkes; editing by James Mackenzie, David Evans and Dan Grebler

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