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Vinci, Greece in Talks on Revising Road Contracts

Jan. 17 (Bloomberg) -- Vinci SA, Europe’s largest construction company, is in talks with the Greek government to modify operating contracts for two highways it’s building, as the economic slump hurts traffic in the debt-laden country.

The building company isn’t seeking to alter agreements in other European markets, Louis-Roch Burgard, head of Vinci’s operating-concession businesses excluding French toll roads, said in an interview.

“Greece is suffering more than other European countries, as its economic adjustment is quite marked,” Burgard said at Vinci’s headquarters in the Paris suburb of Rueil-Malmaison. “We’re currently talking about adjustment measures of the contracts to the new economic conditions.”

Gross domestic product in Greece will probably contract by 3 percent this year after shrinking 4 percent in 2010, Fitch Ratings said on Jan. 14, when it downgraded the country’s debt one level to BB+, below investment grade. Vinci’s assets in Greece include a 36 percent stake in Olympia Odos, a partnership that’s building, upgrading and operating a 365-kilometer (230-mile) highway linking Athens, Tsakona and Patra, and 14 percent of Aegean Motorway, a road between Maliakos and Kleidi.

‘No Major Difficulties’

“There are no major difficulties in the talks” with the Greek government, Burgard said in the Jan. 12 interview, declining to specify how agreement terms may be altered. “As far as we can see, there’s no need to revisit contracts elsewhere in Europe,” as “concessions are very resilient, notably for light-vehicle traffic.”

Vinci fell as much as 74 cents, or 1.8 percent, to 40.86 euros and was down 1.7 percent as of 4:12 p.m. in Paris trading. That pared the stock’s gain this year to 0.6 percent, valuing the company at 22.6 billion euros ($30 billion).

The French builder, which manages highways in its home market, Germany and elsewhere in Europe, reiterated in December that group sales probably rose 5 percent in 2010, helped by growing revenue from toll roads and the acquisitions of engineering company Cegelec SA, facility-management provider Faceo and some quarries for road-surfacing materials owned by Anglo American Plc’s Tarmac division.

A partnership led by Vinci won a French government contract in December to run the 3 million-passenger airport serving the western city of Nantes and eventually build a replacement for the facility.

‘Interested’ in Airports

Vinci would be “very interested” in larger airport contracts domestically, Burgard said. Outside France, “there are several targets,” including a project for which Greece’s government may seek bids in coming weeks to develop Kastelli airport in place of Heraklion airport on the island of Crete, the executive said.

The French company is also looking at expanding beyond Europe, including the U.S. and India, to export construction and operating-concessions management expertise, he said.

“We’re looking quite deeply at the U.S. market anew,” Burgard said. “There’s a pipeline of projects, mainly for highways, and for railroads.”

Vinci is the preferred bidder to build and run a French high-speed train line between Paris and Bordeaux that will require about 7.2 billion euros of works. The company has set up a partnership with Alstom SA, Obrascon Huarte Lain SA and Virgin Group Ltd. to bid for a high-speed rail project in Florida.

In India, “competition is very fierce” in the pre-qualification phases for the Kishangarh-Udaipur-Ahmedabad highway, which it’s working on with Hindustan Construction Co., as well as “at least two other projects,” Burgard said.

To contact the reporter on this story: Francois de Beaupuy in Paris at fdebeaupuy@bloomberg.net.

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net.

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