96/315/ECSC: Commission Decision of 7 February 1996 concerning aid to be granted by Ireland to the steel company Irish Steel (Only the English text is authentic) (Text with EEA relevance)

• Articles: 8

Article 1

1. The following maximum amounts of aid which Ireland plans to grant to the publicly-owned steel company Irish Steel in connection with its sale, may be regarded as compatible with the orderly functioning of the common market provided that the conditions of Articles 2 to 5 are met:

- up to a maximum of £ Irl 17 million for the writing off of an interest-free Government loan,

- a cash contribution of up to a maximum of £ Irl 2,831 million to cover a balance sheet deficit,

- a cash contribution of up to a maximum of £ Irl 2,36 million to cover specific remedial environmental works,

- a cash contribution of up to a maximum of £ Irl 4,617 million towards the costs of servicing debts,

- a cash contribution of up to a maximum of £ Irl 0,628 million to cover a deficit in the pension scheme,

- a further cash contribution of up to a maximum of £ Irl 7,2 million,

- indemnities of up to a maximum of £ Irl 2,445 million in respect of possible residual taxation and other costs and financial claims arising from the past,

- up to a maximum of £ Irl 1,217 million, representing the aid element contained in State guarantees on two loans amounting to £ Irl 12 million.

2. The aid has been calculated to enable the company to return to viability by 30 June 1998. In the case that such viability is not attained by that date, Ireland shall not request any further derogation pursuant to Article 95 of the ECSC Treaty for this company.

3. The aid shall not be used for the purpose of unfair competition practices.

4. Without prejudice to the aid measures referred to in this Article, any loans to the company must be on normal commercial terms; and the beneficiary company must not receive debt holidays or friendly treatment of debts to the State.

Article 2

1. The beneficiary company shall not increase the existing liquid steel capacity of 500 000 tonnes per annum and the existing hot-rolling capacity of 343 000 tonnes per annum in finished products, other than resulting from productivity improvements, for a period of at least five years starting from the date of the last payment of aid under the plan.

2. The beneficiary company shall not extend its current range of finished products, as communicated to the Commission in November 1995, in the first five years and shall not produce beams of a larger size than its current range of sizes in that period. Within its current range of beams it shall limit production for the Community market of its largest U beams (Imperial), HE beams (metric) and IPE beams to a cumulative 35 000 tonnes per annum during that period.

3. The beneficiary company shall not exceed the following levels of production per financial year (3):

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4. The beneficiary company shall not exceed the following levels of European sales (Community, Switzerland and Norway) in hot-rolled finished products per financial year (4):

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Article 3

The approval of aid outlined in Article 1 is, in addition, subject to the following conditions:

1. the level of net financial charges of the new company will at the outset be set at least at 3,5 % of annual turnover;

2. the company or its legal successor will not claim or be granted tax reduction or relief on the basis of past losses which are being covered by State aid;

3. the beneficiary company shall carry out all the restructuring measures laid down in the restructuring plan as it has been submitted to the Commission, in accordance with the timetable contained therein.

Article 4

1. Ireland shall cooperate fully with the following arrangements for monitoring this Decision:

(a) Ireland shall supply the Commission twice a year, and not later than 15 March and 15 September respectively, with reports containing full information in accordance with the Annex, on the beneficiary company and its restructuring. The first report should reach the Commission by 15 March 1996 and the last report by 15 September 2001 unless the Commission decides otherwise;

(b) the reports shall contain full information necessary for the Commission to monitor the restructuring process, the creation and use of capacity and show sufficient financial data to allow the Commission to assess whether its conditions and requirements are fulfilled. The reports shall at least contain full information in accordance with the Annex, which the Commission reserves the right to modify in line with its experiences during the monitoring process. It is up to Ireland to oblige the beneficiary company to disclose all relevant data which may, under other circumstances, be considered as confidential.

2. The Commission shall, on the basis of the reports, draw up half-yearly reports which shall be submitted to the Council not later than 1 May and 1 November respectively, in order to allow discussion in the Council, if appropriate. If the beneficiary company envisages investments creating or extending capacity, the Commission shall inform the Council on the basis of a report presenting the financing arrangements and demonstrating the absence of State aid.

Article 5

1. The Commission may at any time decide that the reports referred to in Article 4 (1) shall be on a quarterly basis if it deems such necessary to fulfil its monitoring tasks. The Commission may at any time decide to mandate an independent consultant, selected with the agreement of Ireland, to evaluate the monitoring results, to undertake any research necessary and to report to the Council.

2. The Commission may have any necessary checks made in the aided company in accordance with Article 47 of the ECSC Treaty in order to verify the accuracy of the information given in the reports referred to in Article 4 (1) and in particular compliance with the conditions laid down in this Decision. In the case that a Member State makes a complaint that State aid is enabling the aided company to underprice, the Commission will initiate an investigation pursuant, in particular, to Article 60 of the ECSC Treaty.

Article 6

1. Without prejudice to any penalties it may impose by virtue of the ECSC Treaty, the Commission may, within the procedure provided for under Article 88 of the ECSC Treaty, inter alia, require the suspension of payments of aid or the recovery of aid already paid if, on the basis of the information received, at any time it were to find that the conditions laid down in this Decision had not been met. If Ireland were to fail to fulfil its obligations under any such decisions, Article 88 of the ECSC Treaty will continue to apply.

2. Moreover, if the Commission establishes, on the basis of the reports referred to in Article 4 (1), that substantial deviations from the financial data, on which the viability assessment has been made, have occurred, it may require Ireland to take appropriate measures to reinforce the restructuring measures of the aided company.

Article 7

This Decision is addressed to Ireland.

Done at Brussels, 7 February 1996.

For the Commission

Karel VAN MIERT

Member of the Commission

(1) OJ No C 284, 28. 10. 1995, p. 5.

(2) OJ No L 362, 31. 12. 1991, p. 57.

(3) 1 July to 30 June.

Schedules & Appendices

ANNEX

THE COMMISSION'S INFORMATION REQUIREMENTS

(a) Investments

- details of investments realized,

- date of completion,

- the costs of the investments, the sources of finance and the sum of any related aid involved,

- the date of aid payment.

(b) Workforce evolution

- number and timing of job losses,

- the total costs,

- a breakdown of how the costs are being financed.

(c) Production and market effects

- monthly production of liquid steel, semi-finished products and finished products by category as per product range notified to Commission,

- breakdown of products sold, including volumes, prices and markets.

(d) Financial performance

- evolution of selected key financial ratios to ensure progress is being made towards viability (the financial results and ratios must be provided in a way allowing comparisons with the company's financial restructuring plan),

- level of financial charges,

- details and timing of aids received and costs covered,

- terms and conditions of any new loans (irrespective of source).

(e) Privatization

- selling price and treatment of existing liabilities,

- disposal of proceeds of sale,

- date of sale,

- financial position of company at time of sale.

(f) Creation of a new company or new plant incorporating capacity extensions

- identification of each private and public sector participant,

- sources of their financing for the creation of the new company or new plants,

- terms and conditions of the private and the public shareholders' participation,

- management structure of a new company.