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MADRID, July 18 Creditors of a bankrupt Spanish motorway business delayed a meeting to decide whether to liquidate it on Friday, two sources close to the talks said, giving the government more time to find a way to prevent billions in debt going on to its books.
After more than a year of negotiations between ministries, banks and construction companies, the government has yet to find a way of saving nine bankrupt motorways, without debt of more than 4 billion euros ($5.4 billion) hitting its deficit.
If the creditors of the AP-36, a motorway owned by builders Ferrovial and Sacyr, had decided to put the business into liquidation, the government would have had to pay its debts of around 500 million euros under Spanish law.
The other eight could then follow suit.
"The judge has put off the meeting until the 19th of September," one of the sources said. The request was made by the counsel for the state, a legal body which represents the interests of the state, the sources said.
Spain has pledged to reduce its public deficit to about 3 percent of gross domestic product (GDP) by 2016, implying some 35 billion euros will have to be found in the three years from end-2013 to end-2016 to meet the target. A hit of 3 billion euros would make this challenging task even harder.
Under Spanish legislation drawn up more than 40 years ago, when a private motorway goes bust, the state has to repay owners for the cost of the land and the construction.
Spain wants to minimise the effect of any rescue on Europe-agreed deficit targets. The government has sought a way of funding its obligations through public debt, rather than through the government's budget deficit.
Ferrovial and Sacyr declined to comment. A spokeswoman for the Ministry of Public Works said the government was still working on a solution. She would not say if the government expected to reach a solution before Sept. 19.
Traffic on the nine toll roads, most of which connect the capital Madrid to outlying towns, has failed to reach targeted levels during a recession.
Banks holding debt linked to failed motorway companies of around 3.9 billion euros, with a further 470 million of debt with builders. The maximum hit for the deficit would be 3 billion euros, a government source said. ($1 = 0.7396 Euros) (Reporting by Sonya Dowsett; Editing by David Holmes)