(Adds information from separate newspaper article)
MILAN Feb 5 Italy's biggest highways operator Atlantia plans to make a paper-only offer for airport group Gemina to avoid an increase in its debts.
"I don't want to go into the technical details," Chief Executive Giovanni Castellucci said in an interview with Corriere della Sera newspaper on Tuesday.
"Our goal is clear: a full merger without spending any cash, so that we don't increase Atlantia's debt level."
But powerful Gemina shareholders, including investment bank Mediobanca and insurers Fondiaria and Generali, want Atlantia's offer to include cash, according to a report in Il Messaggero also on Tuesday.
They want to monetise their stakes, according to the report in Il Messaggero.
Atlantia and Gemina, both controlled by the Benetton family's holding Sintonia, said last month they were in talks to merge following months of speculation about a possible tie-up.
The deal is worth around 1.1 billion euros ($1.5 billion) and would help Gemina with a plan to invest in Rome's Fiumicino airport.
Castellucci told Corriere della Sera the merger would enable Atlantia to enter a new business sector, and would give Gemina the financial stability for its plan to spend more than 12 billion euros to 2044 in upgrading Rome's airport.
The deal would make Atlantia more like larger rivals such as Vinci, Ferrovial or Abertis which have both motorway and airport assets.
Atlantia had debt of 10.0 billion euros as of September 30, compared to a market capitalisation of 8.7 billion euros according to Reuters data.
Credit ratings agency Fitch said on January 14 it was monitoring Atlantia's A rating for potential impact from the merger with the much smaller and less-indebted Gemina.
"A material increase in the current and projected group's debt level could potentially have a rating impact," Fitch said.
Gemina's advisers Credit Suisse and Banca Leonardo believe the company's regulated asset base values it at 1.8 billion euros, which is equivalent to its market capitalization, Il Messaggero said. That valuation does not take Gemina's investment plans into account.
Gemina's lawyers are trying to determine whether Atlantia will be forced to pay minority shareholders an opt-out option, Il Messaggero said.
Gemina was not immediately available to comment. ($1=0.7376 euros) (Reporting by Jennifer Clark; Editing by Mike Nesbit and Jane Merriman)