UPDATE 1-Atlantia requested govt respect market conditions in motorway deal-letter

(Adds govt reaction)

MILAN, Sept 23 (Reuters) - Atlantia made clear to the Italian government in July that any deal over the ownership of its motorway assets would need to meet market conditions and protect the rights of minority shareholders, a document seen by Reuters showed.

Atlantia, controlled by the Benetton family, has been locked in a legal battle with the state over its motorway concession since the deadly collapse of a bridge operated by its Autostrade per l’Italia toll-road unit in 2018. The government has been threatening to strip Autostrade of its concession.

The dispute appeared to have been resolved on July 14 when the government approved a plan that would see Atlantia pull out of the Autostrade business to make room for state lender CDP.

But that agreement risks unravelling because of disputes over its impact on minority shareholders in both Atlantia and Autostrade, and the sequencing of events to resolve the concession dispute.

The government insists that it can only halt measures to revoke Autostrade’s motorway contract once the ownership issue is settled. Atlantia wants that threat removed before a deal is finalised.

In a letter dated July 14 sent to the government, the group outlined the conditions under which it was ready to enter a deal.

“Such transactions must be in line with Autostrade’s market values ... Naturally the new controlling shareholder in Autostrade will replace Atlantia in providing the guarantees it currently offers on Autostrade’s debt,” the letter said.

A government source told Reuters Rome wants Atlantia to swiftly conclude a deal based on the commitments undertaken in July.

But a source close to Atlantia said that the conditions set out in the letter were an integral part of the company’s commitments and of the accord unveiled on July 15 by the government.

Additional reporting by Giuseppe Fonte, writing by Francesca Landini, editing by Valentina Za and Keith Weir