Following an in-depth investigation, the European Commission has concluded that restructuring aid of €97 million, which Slovenia plans to grant to automotive components manufacturer Cimos Group, complies with EU state aid rules. The Commission foundthat Cimos' restructuring plan will allow the company to become viable again in the long-term without needing further state support, and without unduly distorting competition in the Single Market.
Cimos has been in financial difficulties due to high bank debt that it was unable to repay. In July 2013, the Commission approved temporary rescue aid worth €35 million for Cimos, to give thecompany time to work out a restructuring plan capable of ensuring its long-term viability.
In November 2013, Slovenia notified a restructuring plan, which depended on the conclusion of a voluntary debt restructuring agreement with Cimos' banks. However, negotiations with the banks stalled.The Commission had doubts if the plan would restore Cimos' viability and opened an in-depth investigation in April 2014 to assess its compatibility with the requirements of the 2004 Guidelines on Rescue and Restructuring state aid.
After the voluntary restructuringdiscussions with the banks failed, a compulsory settlement procedure was initiated. In October 2014, Cimos' creditors reached an agreement under this procedure and Slovenia updated the restructuring plan in light of the modified restructuring terms proposed.
Under the updated plan, the banks and the Slovenian state agreed to restructure Cimos' debt through a debt-for-equity conversion and extending the repayment period. The Commission's investigation indicated that the updated plan was based on realistic assumptions and should enable the company to return to long-term viability within a reasonable timeframe. In addition, Cimos committed to reduce its production capacity by divesting three profitable plants, which will limit the distortion of competition caused by the aid. Finally, Cimoswill itself substantially contribute to the costs of restructuring.
The Commission therefore concluded that the planned restructuring aid complies with EU state aid rules and in particular the conditions set out in the Guidelines.
Cimos is a major Slovenian manufacturing company with close to 7,000 employees whose main activity is the production of automotive components.
Aid granted to companies in difficulty highly distorts competition as it artificially keeps a company in the market that would otherwise have left it. It can therefore only be granted under strict conditions.
The Commission's 2004 Guidelines on Rescue and Restructuring aid require, in particular, that beneficiaries work out a sound restructuring plan that enables them to become viable in the long-term on the basis of realistic assumptions. This is to avoid situations where a company that cannot become viable again keeps asking for public support. The plan must provide for measures to reduce the distortions of competition induced by the state support, such as the reduction of capacity or market share. Furthermore, the beneficiary needs to make a significant own contribution to the costs of restructuring. Finally, rescue and/or restructuring aid may be granted only once over a 10-year period ('one time, last time' principle).
The non-confidential version of the decision will be made available under the case number SA.37792in 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.