Progetto Italia moves ahead: Webuild ready to invest in Astaldi

It was a long road to get here, but Italy’s second largest construction company, Astaldi, cashes-in the approval on its creditor composition proposal. Webuild Group (formerly Salini Impregilo) is now ready to invest in Astaldi, creating one of Europe’s leading firms in the infrastructure construction sector.

The deal is part of the Progetto Italia project, which can now begin in earnest after the Court of Rome approved Astaldi’s creditor composition proposal  and published the official ruling.

The Court’s ruling puts a successful end to a nearly two-year process that has helped the company to return to performing status, saving jobs and ensuring that Astaldi remains a going concern.

The agreement has been approved by Astaldi’s majority of creditors. Now Progetto Italia can move forward to consolidate and relaunch Italy’s infrastructure sector. The Court’s ruling on the Astaldi creditor agreement paved the way for Webuild (starting back when it was still called Salini Impregilo) to become Astaldi’s majority shareholder through a dedicated capital increase forecast to be completed by the fall, ramping up its volume growth yet again.

September 28, 2018 was the de facto start date of a lengthy process leading Astaldi through a deep restructuring process. The firm is a strategic player in Italy’s economy because of the skills it has built up over the years and the number of workers involved, and has a track record of major international infrastructure projects.

In September, Astaldi asked for a creditor composition proposal, laying the groundwork for its financial recovery.

A few months later, on February 14, 2019, Webuild (known as Salini Impregilo at the time) made an offer to invest in the “new and improved” Astaldi as the majority shareholder. On April 9, the company’s creditors met to discuss the agreement, setting an April 29 deadline for approval which came with 69.4% of  votes in favour. On May 4, the Court set June 23 as the hearing date for the composition approval and as deadline for creditors to file any objections.

Next, it was up to the judges to check the validity of the procedure and the results of voting by creditors. Finally, on July 17, 2020, the Court of Rome published the approval decree of Astaldi’s Composition with creditors on a going concern basis. With the approval, Astaldi returns to performing status and, with Webuild’s help, the Progetto Italia plan can take another step forward towards its goal of relaunching Italy’s construction sector and creating a larger and more competitive company on international markets.

Webuild’s investment in Astaldi is a key moment in the Progetto Italia plan to create a major international player with deep roots in Italy’s domestic market. This new, larger group will be able to operate more competitively on a global level thanks to its larger scale, combined know-how, and sufficient financing for the solid investments in health and safety, technology, and innovation required to compete on international markets.

The plan is strong of the support of Cassa Depositi e Prestiti (Italy’s state backed lender) and Italy’s largest banks, which took stakes in Webuild in a €600 million capital increase. CDP Equity invested €250 million; Intesa Sanpaolo, Unicredit and Banco BPM invested a further €150 million; Italian and foreign institutional investors €150 million, and Salini Costruttori €50 million.

To explain the project’s industrial strategy, it’s helpful to backtrack. On April 3, 2019, Webuild (then Salini Impregilo) acquired the historic Cossi Costruzioni company, among the world’s finest in the tunneling sector. Cossi was controlled by Condotte, a firm in receivership.

The goal of the Cossi acquisition was to consolidate and further develop its extraordinary expertise in large tunnel construction honed over the years. At the time of the Webuild acquisition, the Cossi group employed 170 people, vaunted prestigious clients like Gotthard SA, and had worked on projects including the post-fire restoration of the Mont Blanc tunnel and the construction of important motorway lots between Italy and Switzerland.

The acquisition not only helped Cossi avoid bankruptcy, but allowed some of its highly specialised workers to join in Webuild-managed projects around the world (the new Genoa Bridge chief among them). Cossi is an example of how Italian industrial talent can be revived by joining forces with a large group working on major projects both in Italy and abroad. This is the model that with Astaldi allows for a sizeable increase in volumes and which already boasts strong industrial synergies .

Webuild investment in Astaldi is grounded on solid industrial foundations. Webuild and Astaldi share numerous strategic connections and already work together today on many major projects.

The groups have worked on some of the world’s most important infrastructure projects, from building the new Panama Canal to the Third Bridge over the Bosporus, and currently share some of the most important ongoing projects in Italy and abroad. At the top of the list is the M4, Milan’s new metro line, a highly innovative project that will significantly improve the city; the Palermo-Catania high-speed, high-capacity railway line, which will bring the EU’s TEN-T networks to Sicily; the Naples-Bari high-speed rail line; the SS Jonica highway; the high-speed rail link between Verona and Padua; and the Hurontario light rail line in Canada.

All of these projects show a synergy that pre-dates Progetto Italia. Most importantly, they point the way forward. With these two companies and others combining their strengths and “competing together” to create modern, iconic, efficient and sustainable works, the future looks bright for Italy’s infrastructure sector.

Webuild Group’s investment in Astaldi is not Progetto Italia’s ultimate goal.

In Italy, the construction sector is going through  challenging times. The government’s promise to restart work on 130 major projects that are currently stalled (in recent legislation known as the Simplifications Decree) is crucial to keeping unemployment under control. Aging infrastructures and companies that risk default are two sides of the same coin. The situation could get worse if prompt action is not taken.

The Court of Rome’s approval of Astaldi’s composition with creditors is a boost for Progetto Italia’s goal of consolidating Italian expertise in the construction sector. Progetto Italia aims to grow even further. Today, the Group already boasts an order book of €44 billion, directly and indirectly employing around 70,000 people globally, in almost 110 in-progress projects comprising approximately 8,400 miles of railways and metro, 50,000 miles of roads, and 600 miles of bridges, and over 300 dams and hydroelectric plants. It is one of the largest European companies in the industry.

These numbers are testimony to the success of Salini Impregilo’s (now Webuild’s) growth strategy from 2007 to 2019, with a turnover that went from €600 million to €5.3 billion and an order backlog that grew from €3 billion to €36.2 billion.

We’re stronger when we work together. We beat the competition only when we unite. This is now an imperative in a global market made up of giants whose greatest strength is their size.