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PR(04)39 - The EFTA Surveillance Authority adopts new State Aid Guidelines for Rescuing and Restructuring firms in difficulty


The Authority has today adopted new Guidelines on State Aid for rescuing and restructuring firms in difficulty. The new guidelines clarify the approach the Authority intends to take where the State financially supports rescue and restructuring operations in favor of enterprises.

Rescue aid is temporary, aimed at keeping a company afloat while a restructuring and/or liquidation plan is devised. The rescue aid must not be granted for a period beyond six months. The company must repay the aid with normal market interest rates.

The new guidelines are based on the core principle that in any restructuring operation the aid beneficiary should be obliged to finance a large part of its restructuring cost. This can be achieved either by using funds they obtained by selling assets that are not essential to the firm's survival, or from external financing obtained at market conditions. The old guidelines did not address the issue of how substantial the company’s own contribution should be. The new ones, on the contrary, quantify a minimum percentage threshold of the restructuring cost that the aid beneficiary has to carry with its own means. This percentage ranges from 50% own contribution by large undertakings to 25% by small enterprises. The new guidelines introduce a standstill period of ten years that should elapse after the award of rescue or restructuring aid before new rescue and restructuring aid can be received.

The Authority has decided to propose appropriate measures. EFTA States are asked to signify their agreement with the new rules within one month. In case of acceptance, the EFTA States will have to comply with the new provisions by 1 June 2005. The Guidelines enter into force on their date of adoption.

For further information, please contact Mr Amund Utne, Director Competition and State aid Directorate, tel: (+32)(0)2 286 1851 or Mr Espen Bakken, National Expert, Competition and State aid Directorate, tel: (+32)(0)2 286 18 18.

1 December 2004

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