MADRID, Feb 26 (Reuters) - A Spanish court has rejected a government proposal to rescue two of nine bankrupt motorways, increasing the likelihood the toll roads will go into liquidation and the state will have to assume their debt of more than 4 billion euros ($4.5 billion).
A Madrid commercial court said on Feb. 24 the terms of the rescue package were not legal and the Ocana-La Roda and R4 roads would now enter liquidation, court documents showed.
The government will appeal the decision, a government spokeswoman said. Ferrovial, a major shareholder in both roads, declined to comment.
“If the roads start entering into liquidation one by one, it makes a rescue package more unlikely as there will be less roads to group together,” said one source close to the negotiations.
The road operators went bust after failing to attract enough traffic during Europe’s economic crisis. Use of the roads, which mostly run around Madrid, has dropped further still because many have toll-free highways running alongside them.
Under a Spanish law drawn up over 40 years ago, the state is liable for the cost of the land and construction of private motorways if they go bust. Spain has proposed a 2.3 billion-euro rescue package that would keep the highway debt from going onto its deficit.
The terms of the deal would inflict a 50 percent loss on the banks that lent the money to build the roads. Spanish lenders accepted the terms, but foreign banks objected, sources say, delaying any rescue as they seek better conditions.
Negotiations between ministries, banks and construction companies have dragged on for 18 months as the government, under pressure from Europe to keep its public deficit down, tries to keep the billions off its books.
Ferrovial Chief Executive Officer Inigo Meiras said on Wednesday that if a solution was not agreed this year, five of the roads would go into liquidation.
Most banks and companies have already made provisions for the losses. Builders including Ferrovial, Abertis, OHL , ACS, FCC and Acciona created joint ventures to win concessions from the government to build the roads during Spain’s boom years. ($1 = 0.8915 euros) (Reporting By Sonya Dowsett; Editing by Larry King)