Abertis (ABESM; BBB-Sta, BBB Sta). Last week (23 August), the TxDOT (i.e., the 'Texas Department of Transportation' which is the Texas grantor) announced the termination of Abertis' "Houston SH-288" toll-road concession earlier than the initially established 'March 2068' maturity. Abertis (and ACS' subsidiary, Iridium) will receive a USD1.7bn payment because of this early concession termination. TxDOT will assume control of the toll-road from October'24.
Our reaction to the news: this is NOT a surprise to us and rating agencies had already flagged this scenario in their reports.
- Both the timing (end of summer) and the compensation amount (USD1.7bn) is in line with our own expectation.
- We do not expect this action to have a negative impact on Abertis' current ratings (NR, BBB-, BBB, all Sta).
- The USD1.7bn compensation may be below the asset valuation Abertis used for the acquisition, but more importantly, it is well above the asset’s debt (USD654mn at YE23).
- On 2 April 2024, TxDOT had already stated in Houston public media that the decision to authorize the ending of the contract was "the first step in the process of ending it" after 5 members of the Texas Transportation Commission had authorized the TxDOT to end the contract in late March'24.
- Recall that in Oct'23 Abertis had paid USD1.53bn for a 57% stake (closed in Dec'23) in this SH-288 concession and that ACS/Mundy's then injected EUR1.3bn in capital for M&A and to protect its rating.
- Last week's statement (CNVM attached, in Spanish) states that the ACS group will get USD1.732bn, of which Abertis will get a USD1.2bn payment (total positive financial impact) and Iridium (a subsidiary which belongs to ACS) will get USD532mn.
- The termination of the deal will result in a non-cash loss of around EUR555mn for Abertis after tax and excluding provisions (or EUR418mn with the reversal of provisions).