ACS and Eiffage will not receive compensation for high speed rail PPP

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ACS and Eiffage will not receive compensation for high speed rail PPP

ACS and Eiffage will finally not receive compensation over the Perpignan- Figueres high speed rail (HSR) line linking Spain and France.

Last month, an European Court rejected a complaint from the consortium claiming an overspending of €350 million in the construction phase due to reasons out of its control.

The project was developed by a ACSEiffage 50/50 joint venture (JV). The rail line began commercial operations on 1 January 2013. The total project investment was €1200 million (US$1342 million), of which €600 million was provided from public funds.

The project will enter into bankruptcy on 31 March 2015, when a €428 million (US$479 million) project debt matures. The project is in troubles due to the fact that traffic is much lower than anticipated and the investment was much higher. According to the firms, the governments prioritized domestic rail traffic against the high speed rail link.

The JV is currently in negotiations with Spain's BBVA, which was the lead arranger bank providing a loan of €382 million to the JV, to get a postponement of debt repayments and a debt haircut. The other banks involved are CaixaBank, Caja Madrid (Bankia), Banesto (Santander), ING y Royal Bank of Scotland (RBS).

Spain is currently solving a similar problem in the road sector. Several Spanish highway concessions have entered into bankruptcy due to the low traffic and higher than expect land acquisition costs.

Spanish Infrastructure Ministry (Fomento) plans to set up a special vehicle to nationalize bankrupt concessions. A debt haircut of 50 % is planned for the road concessions. The new vehicle would bring together at least nine concession holders, together owning 748 km of toll roads:

  • 4 radial highways in Madrid, R-2, R-3, R-4, and R-5;
  • Barajas Airport - Madrid highway;
  • Madrid - Toledo highway;
  • AP-36 Ocaña - La Roda;
  • Cartagena - Vera highway; and
  • Alicante bypass highway.

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