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PR(96)02: Rescue aid to Driftsselsskapet Rena Karton AS, a Norwegian producer of folding box board,approved by EFTA Surveillance Authority

14.10.2002

The EFTA Surveillance Authority decided today not to raise objections for plans to award rescue aid in favour of Driftsselskapet Rena Karton AS (DRK). The rescue aid concerns a one-off award of a subordinated risk loan from the Norwegian Industrial and Regional Development Fund (SND) to DRK amounting to NOK 2.7 million.

The notification followed the bankruptcy of Rena Karton, a Norwegian producer of folding box board. DRK is a provisional company set up to continue production for a limited period of 6-7 weeks while new owners are sought for former Rena Karton. DRK rents production facilities and carries out its activities according to a rental agreement with the administrator of bankruptcy.

The rescue aid was found to satisfy the Authority's rescue aid policy on the following grounds: a) The aid is limited to liquidity help in the form of a loan bearing a commercial rate of interest (9 % p.a.) for a limited period of time (6 months), b) the amount of NOK 2.7 million does not exceed the company's estimated need for liquidity (NOK 23 million) during the rescue period, c) the company is located in an area eligible for regional aid which is already experiencing significantly higher unemployment rates than the national average. The Authority took into account that alternative employment in the region is scarce and that the consequences of closing down production are likely to spread to other economic activities, thus leading to serious social difficulties, d) Both DRK and former RK satisfy the definition of small- and medium-sized enterprises which provides a further justification for taking a favourable view with regard to the aid and e) DRK's production is estimated to 3'000 tonnes in the rescue period, corresponding to an annual capacity utilization of 20'000 tonnes. The total EEA consumption of folding box board is 1.3 million tonnes per year. The aid should therefore not have unjustified adverse effects on competitors within the EEA.

The Norwegian Government is obliged to submit a report to theAuthority on the operations of DRK during the rescue period.

For further information, please contact Mr. Morten Sandberg, Competition and State Aid Directorate, tel. +32 2 286 18 53.

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