Salini Impregilo moves for Astaldi

14 February 2019

Astaldi sign

Salini Impregilo has made a bid to acquire fellow Italian contractor Astaldi’s equity, claiming its key objectives were the continuity of ongoing projects, the preservation of Astaldi’s value chain, sector stability, employment levels and the development of relative technical expertise.

Salini had previously made a “non-binding preliminary demonstration of its interest”.

Nearly six months ago, Astaldi applied to the Court of Rome for protection from its creditors following a delay in the sale of the Yavuz Sultan Selim Bridge – formerly known as the Third Bosphorus Bridge – in Turkey.

The company had been hoping to sell the bridge to strengthen its liquidity position and reduce debt, which stood at €1.26 billion at the end of 2017. A binding offer for the bridge was also one of the conditions for Astaldi’s planned capital increase of up to €300 million.

Salini’s bid is subject to certain conditions, including court approval of Astaldi’s supervised arrangement with creditors (concordato preventivo), expected in 2020.

The offer is said to envisage an economic and financial plan to support the restructuring and continuity of Astaldi’s EPC (engineering, procurement and construction) activities.

127370 salini impregilo new logo

Meanwhile, it said it would look at the separation of non-core assets, including the concessions arm that includes the Third Bosphorus Bridge project, the Gebze-Orhangazi-Izmi highway, the Etlik integrated health campus in Turkey, the Santiago airport and the Felix Bulnes hospital in Chile, the Venezuelan credit, and the real estate related to the headquarters in Rome, Italy. This would be moved into a unit to be liquidated with the proceeds intended for the sole benefit of unsecured creditors.

The deal would also envisage a cash capital increase equivalent to €225 million for 65% of Astaldi (after the capital increase), reserved to Salini Impregilo. This would be partly dedicated to the payment of secured and super senior debt holders, and partly supporting the continuity plan, which would result in Salini Impregilo taking a controlling stake in Astaldi following the completion of the creditors’ procedure.

Unsecured creditors

There would be a partial settlement of unsecured creditors, both in the form of shares – which Salini Impregilo said would benefit from continuity of the EPC business – and other participatory financial instruments, which would benefit from proceeds of the sale of non-core assets.

Salini Impregilo said that as a result, Astaldi would file its concordato preventivo proposal with the Court. Upon the Court’s approval, the proposal will be subject to the creditors’ review. If validated by the majority of creditors, it will submitted again to the Court for final approval.

The offer by Salini Impregilo is subject, among other things, to the approval of Astaldi’s proposal, and obtaining the necessary authorisations. Salini Impregilo said it also depended on there being no events that would put the feasibility of the continuity restructuring plan at risk, the support of long-term investors through their participation in the capital increase using their own financial resources, and the support of the banking system to provide Astaldi with cash and bonding lines. This was said to be necessary in the context of the financial and operational stability of the company as envisaged in the concordato preventivo plan.

The structure of the transaction was said not to require any cash commitment or burden for Salini Impregilo ahead of the final Court approval of the concordato preventivo plan and proposal.

Pietro Salini at Cyclopica

Pietro Salini

It was also said to assume that, pending the procedure, Astaldi would have sufficient interim finances and would implement certain interim management arrangements – including the appointment of a chief restructuring officer – to the benefit of all stakeholders, “monitoring the feasibility and execution of the transaction in line with best market practices in similar situations”.

Salini Impregilo added that for the time being, it was not possible to predict the timing for the completion of the potential transaction, although it would be expected within the first half of 2020.

Astaldi has been watched closely by Salini Impregilo over the past few months. The company was formed by a merger of Salini and Impregilo, which was completed in 2013, under chief executive Pietro Salini.


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