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     Following  a proposal by Karel Van Miert, the Member of the  Commission
     with  special responsibility for transport policy, the  Commission  has
     informed the Belgian Government that the State aid notified on  5 April
     is compatible with Article 92 of the Treaty on condition that:
     -   the Belgian State grants no further aid to Sabena;
     -   it gives the company no preferential treatment;
     -   it ensures that the company's preference shares are converted  into
         ordinary shares;
     -   it sends the Commission the company's new statute once it has  been
     -   it   adheres  to  the  restructuring  plan  communicated   to   the
                                     - - -
   On  5  April  1991, in accordance with Article 93 of  the  Treaty  (State
   aids), the Belgian Government notified the Commission of its intention of
   granting  aid  to Sabena.  The aid involves a BFR 16.2 billion  debt  for
   equity  swap and a further two-stage increase in the  company's  capital,
   the  first  involving BFR 10 billion and the  second  BFR 9 billion  (but
   subject to the company attracting another equity holder).  The aid is  to
   be accompanied by a through restructuring of the company, rationalization
   resulting  in  a 25% reduction in personnel numbers, the entry of  a  new
   equity holder and the transformation of Sabena into a company subject  to
   ordinary law.
   The  Commission had decided earlier that the information at its  disposal
   was insufficient for it to be sure that the aid would be compatible  with
   the  provisions  of  the Treaty and it  therefore  informed  the  Belgian
   Government on 8 May that it would be initiating a procedure under Article
   93(2) (see press release IP(91)388).
                                     - 2 -
   Once it had been given further undertakings, the Commission decided  (on
   the  basis  of  the  criteria defined  in  Memorandum  No  2  concerning
   Community  air  transport  policy  and State  aids)  that  the  aid  was
   permissible (subject to the conditions laid down in the first  paragraph
   above) because:
   - it was a one-off grant intended to restore the undertaking to economic
     viability within a short period, to attract a new equity holder and to
     transform Sabena into an undertaking subject to ordinary law;
   - the  aid  was  reasonably  consistent with  the  difficulties  of  the
     undertaking  and  would  not simply shift the problem  down  the  line
     within  the sector since the restructuring and rationalization of  the
     undertaking   would   culminate  in  an  initial  reduction   of   the
     undertaking's capacity;
   - the  Belgian  Government  had indicated its intention  of  not  giving
     Sabena more favourable treatment than other Community airlines.
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