Brussels, 17th July 2008
The European Commission has authorised, under the EC Treaty’s rules on state aid, a €2.4 million loan guarantee by the Greek State to rescue the fibre yarns producer Varvaressos S.A. As all the requirements of the Community guidelines on state aid for rescuing and restructuring firms in difficulty are satisfied and the Greek authorities made the necessary commitments, the Commission considers that the aid does not threaten to unduly distort competition in the Single Market and is therefore compatible with the EC Treaty (Article 87).
EU Competition Commissioner Neelie Kroes said: “We have endorsed this rescue aid for Varvaressos because the company is in severe difficulties and because there are sufficient safeguards to prevent a serious distortion of competition. However, it is essential that the six month breathing space for the company is used to find a long-term solution."
Varvaressos suffered high losses, decreased turnover in 2007, its debts surpassed its own capital by a third and it is not able to finance its recovery using its own resources,.
The amount of €2,387,239 is the minimum necessary to keep the firm in business for six months, in order to establish a restructuring plan.
According to information supplied by the Greek authorities, Varvaressos S.A. employs currently 259 persons in Imathia, a region where unemployment is more than double the average in Greece.
The aid will be paid in the form of a loan guarantee by the Greek Ministry for Economic Affairs and Finance.
Within six months from the grant of the guarantee, Varvaressos will have to present a credible restructuring plan ensuring the long term viability of the company and complying with the Commission guidelines.
The non-confidential version of the decision will be made available under the case number N 635/2007 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.