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The Spanish government has form in dealing toughly with rebels, most recently in Catalonia. Undaunted, a group of hedge funds has joined battle with Madrid over nine bankrupt toll roads. This fight comes as two foreign suitors circle Spain’s leading toll road operator Abertis.

Before the financial crisis, Spain built too many private toll roads, often on the basis of exaggerated traffic forecasts. The results were predictable. The debt of the now- bankrupt private toll road companies has been bought up by hedge funds.

The Spanish government will take control over eight roads in January and another in April. By law Madrid must provide compensation to the creditors. The question is how much. Original project costs were inflated by soaring land prices in the early noughties. Back then, the government helped the groups cover the cost of compulsory purchases so the roads could be built. On that basis, it puts redress at about €2bn. The hedge funds have in mind €4.5bn — a lot, given Spain’s fiscal needs.

Expecting the ministry of public works and transport to offer foreign hedge funds more than it did to domestic banks seems hopeful. Then again, Madrid cannot just ignore them. The law that provides for reparation requires the ministry to come back with terms in six months after taking control of the roads.

None of this has put off foreign bidders for Abertis, the toll road operation that is a shareholder in three of the failed toll concessions. One bid, under review by domestic regulators, has come from Hochtief of Germany. Hochtief is controlled by Spanish contractor ACS — which is also involved in the failed concessions.

Such connections should sober everyone in the Abertis bid face-off, reminding them its main assets are concessions granted by governments. These rarely wish to accommodate franchisees and their investors as lucratively as the latter would like.

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