Court of Rome and ATAC – a matter of valuation

ATAC, Italy’s largest urban public transportation company, petitioned, in January 2018, to be reorganized under Italian insolvency proceeding of s.c. “concordato preventivo” (a pre-bankruptcy composition with creditors by means of a deed the latters have to approve). After an accurate scrutiny, the Court, at the end of July, eventually decided that petition was compliant with law and remitted it to creditors for their final approval. During examination, ATAC had to clarify why the expert hired to estimate the market value of the business had applied generally accepted valuation standards and techniques instead to refer to those issued by the Italian regulator of public transportation (Autorità di Regolazione dei Trasporti or ART). The purpose of “ART valuation standards” is to grant a fair return on investments to a transportation company that has to hand over its infrastructure and assets to another company at the end of concession time. They are therefore not suitable standards if one wants to estimate market value of a transportation business in case of sale of its ongoing activity. We have been glad to help valuation experts hired by ATAC to explain the above to the Court of Rome and to estimate the business market value.