Third Spanish road files for bankruptcy protection

A second Ferrovial and Sacyr-managed concession - the AP36 Ocana-La Roda - has gone bust, following last month's bankruptcy of Madrid's R4 ring road. It is the third Spanish road to start Chapter 11 proceedings.

In what is becoming a depressingly familiar occurrence, a third Spanish road – the AP36 Ocana-La Roda toll road, linking Toledo with Albacete – has filed for bankruptcy protection.

The concessionaire of the AP36 – Ferrovial (55 percent), Sacyr (40 percent) and Caja de Ahorros y Monte de Piedad de Gipuzkoa y San Sebastián (5 percent) – threw down the towel last Friday, citing much lower-than-expected traffic, Spain's economic crisis, and increased competition from alternative roads, as the main reasons for the Chapter 11 proceedings.

It added that “a significant factor in this decision [to file for bankruptcy protection] was that the potential measures foreseen under [the] law to aid the concession were not effectively implemented by the contractor’s governing body”.

For Ferrovial and Sacyr, the AP36 is their second Spanish road to go bust. Last month, the partners filed for bankruptcy protection for the R4 Madrid-Ocana toll road, one of Madrid's notoriously troubled ring roads, which was suffering from much higher-than-predicted land expropriation costs in addition to the problems that also affected the AP36.

Local sources had previously told Infrastructure Investor that two other Madrid ring roads – the R3 and the R5 – have initiated negotiations with their creditors to put in place standstill agreements, a phase that is usually known as pre-bankruptcy proceedings.

In May, the operator of the AP41 Madrid-Toledo toll road broke the uneasy truce between government and toll road operators by becoming the first road concessionaire to acknowledge its inability to service its debt commitments and appeal to the courts for protection. The AP41 is managed by a consortium of Spanish firms Azvi, Comsa, Isolux Corsan, Sando and the investment arm of Portuguese bank Banco Espirito Santo.

Spain’s Ministry of Infrastructure (Fomento) announced earlier this year that it was extending a loan programme designed to help re-balance these road concessions until 2021.

Fomento has set aside €600 million, or 19 percent of its budget, to tackle increased right-of-way costs. In comparison, the ministry intends to spend €873 million in 2012 to maintain its roads network.