May 09, 2016

Spain guarantees passenger services if TP Ferro fails

Written by  Fernando Puente
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Spain guarantees passenger services if TP Ferro fails David Gubler

INTERNATIONAL passenger services between Spain and France will be "guaranteed" despite the critical financial situation of the high-speed line's concessionaire, according to Spain's minister of development and public works, Mrs Ana Pastor.

"Our task is not to rescue (companies in distress) but to run the service and solve the problems," Pastor says. "Rest assured that the Spanish and French governments will continue to run the public service if, for whatever reason, the concessionaire fails to do so. The service will be guaranteed by Renfe and SNCF," she added without expressly rejecting the possibility of a government bailout.

High-speed trains use the 44.3km line between Figueres and Perpignan to connect Barcelona with several destinations in France including Lyon and Paris, and Madrid with Marseille. The line is also used by some 30 freight trains per week departing from the Port of Barcelona, well below the double-track line's capacity.

TP Ferro, a Spanish-French joint venture formed by construction firms ACS-Dragados and Eiffage, sought judicial protection in March 2015 and entered into receivership last September. The company and its creditors, which include several distressed securities funds (which bought their share to major banks like BBVA, Caixabank or Bankia), are now supposed to negotiate an agreement about its debt, which is estimated at around €500m, before June 30.

If the deadline passes without a settlement, TP Ferro's assets could be liquidated and it would theoretically have to cease operations if the Spanish and French governments finally fail to take control of the concession. The international rail link cannot be bypassed by current services as it is the only standard-gauge line connecting Barcelona and France.

The interests of the build-operate concessionaire are now mostly aligned with those of its creditors, as for both parts the best scenario should include some sort of bailout or even a full nationalisation. For the Spanish government TP Ferro's financial problems have become a source of political annoyance as the country heads for a second general election in six months.

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