2002/200/EC: Commission Decision of 3 July 2001 on State aid which Spain has implemented and is planning to implement for the restructuring of Babcock Wilcox España SA (Text with EEA relevance) (notified under document number C(2001) 1780)

• Articles: 8

Article 1

The ESP 10000 million (EUR 60,1 million) increase in the capital of Babcock Wilcox España SA carried out by TENEO in 1994 constitutes existing aid within the meaning of Article 88(1) of the Treaty.

Article 2

The increases in the capital of Babcock Wilcox España SA of ESP 10000 million (EUR 60,1 million) and ESP 41000 million (EUR 246,4 million) decided by SEPI in 1997 and 1999 respectively constitute aid within the meaning of Article 87(1) of the Treaty. Both increases were unlawfully granted in breach of Article 88(3)(c) of the Treaty, except for a sum of ESP 16725 million (EUR 100,52 million) of the latter increase which has not yet been disbursed.

The said aid nevertheless meets the conditions for exemption under Article 87(3)(c) of the Treaty, as set out in the Community guidelines on State aid for rescuing and restructuring firms in difficulty, and is therefore compatible with the common market.

Article 3

The measures which Spain proposes to implement under the arrangements for privatising Babcock Wilcox España SA, consisting of:

(a) cash injections into NewCo amounting to EUR 55 million;

(b) the payment to NewCo of EUR 100 million for the costs of adapting the activities transferred to it;

(c) the payment to NewCo of EUR 95 million for investments and training to be carried out according to the Investment Plan presented by Babcock Borsig;

(d) the coverage of any ultimate loss under contracts transferred to NewCo, at an estimated cost of ESP 8000 million (EUR 48,1 million);

(e) the coverage up to a maximum of EUR 18 million of any cost incurred through claims against NewCo for any harm or economic damage resulting from events occurring prior to the sale in relation to environmental, labour, tax and social security issues and obligations arising from pension plans, and

(f) the coverage of the deficit in the liquidation of Babcock Wilcox España SA, at an estimated cost of ESP 35000 million (EUR 210,4 million),

constitute aid within the meaning of Article 87(1) of the Treaty.

The aid measures under points (a), (d), (e) and (f), the aid measure under point (b) up to the limit of the effective negative cash flows actually recorded by NewCo during the first three years of operations, and the aid measure under point (c) up to a maximum amount of EUR 73,56 million meet the conditions for exemption under Article 87(3)(c) of the Treaty, as set out in the Community guidelines on State aid for rescuing and restructuring firms in difficulty, and are therefore compatible with the common market.

Article 4

The aid amounting to EUR 100 million, referred to in Article 3(b), for the costs of adapting the activities transferred to NewCo shall be paid only on submission by the beneficiary of proof that negative operating cash flows have actually been recorded at the end of each of the first three years of operations.

Article 5

The aid proposed under the privatisation arrangements for investments by NewCo in venture capital, amounting to EUR 21,44 million, does not meet any of the conditions for exemption under Article 87(2) or (3) of the Treaty. It is therefore incompatible with the common market.

Accordingly, this aid may not be implemented and Spain shall refrain from paying the said amount.

Article 6

The Industrial Plan presented to the Commission must fully be implemented.

Spain shall submit to the Commission annual reports giving all the information the Commission needs in order to be able to monitor the implementation of the Industrial Plan in accordance with point 45 of the Community guidelines on State aid for rescuing and restructuring firms in difficulty. The first of these reports shall be submitted not later than six months after the date of this Decision.

Article 7

Spain shall inform the Commission, within two months of notification of this Decision, of the measures taken to comply with it.

Article 8

This Decision is addressed to the Kingdom of Spain.

Done at Brussels, 3 July 2001.

For the Commission

Mario Monti

Member of the Commission

(1) OJ C 249, 8.8.1998, p. 3.

(2) OJ C 280, 2.10.1999, p. 22.

(3) OJ C 232, 12.8.2000, p. 2.

(4) The capacity reduction is described in detail in recital 122.

(5) Business secret.

(6) The Investment Plan is described in detail in recital 111.

(7) OJ C 307, 13.11.1993, p. 3.

(8) OJ L 195, 29.7.1980, p. 35.

(9) OJ C 288, 9.10.1999, p. 2.

(10) OJ C 368, 23.12.1994, p. 12. Guidelines extended by notices published in OJ C 74, 10.3.1998, p. 31 and OJ C 67, 10.3.1999, p. 11.

(11) See recital 73.

(12) See recital 74.

(13) See recital 31 to 34.

(14) See recital 51 and 52.

(15) See points 40 and 41 of the 1999 guidelines.

(16) See Table 7 in recital 128.

(17) See points 56 to 63 of the 1999 guidelines.

(18) See point 62 of the 1999 guidelines.

(19) See points 35 to 39 of the 1999 guidelines.

(20) See Table 3 in recital 53.

(21) OJ L 10, 13.1.2001, p. 20.

(22) See point 40 of the 1999 guidelines.

(23) See recital 60.

(24) The table does not include any cost linked to contingencies in the environmental, labour, tax and social fields, which have been limited to EUR 18 million because no disbursements are expected to be made under this heading.

(25) The estimate corresponds to the usual market price of 5 % of the expected turnover during the first five years of operations.