Twinning Project Training for Business Sector State Aid for Shipyard Restructuring

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Twinning Project Training for Business
SectorState Aid for ShipyardRestructuring

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Key elements for authorization

• Restoration of viability (restructuring plan)
• Compensatory measures (capacity reduction)
• Aid limited to the minimum (own contribution)

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Restructuring Plan

• The restructuring plan must restore the long term
  viability
• analysis of the actual difficulties
• appropriate internal measures
• realistic assumptions about the market
• (engagement of private capital)

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Viability

• The plan must provide a turnaround in a timeframe
  as short as possible
• After restructuring the company has to compete
  without aid

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Market Survey

• The restructuring plan must include a market
  survey to underlay the assumptions
• The restructuring plan must take into account
  different scenarios
• Best case
• Base case (or other intermediate assumptions)
• Worst case

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Restructuring Measures

• Social measures (staff reduction, training)
• Cleaning up the site (environmental damages)
• Training
• Investments
• Writing off debts
• Working capital
• Covering losses in the restructuring period

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Social Costs of Restructuring

• Commission decides favourable on aid with the
  following objectives
• capacity and staff reduction
• training, counselling and practical help to
  redundant employees

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Compensatory measures

• Avoidance of undue distortions of competition
• reduction of capacity (proportional)
• exceptions
• if extension of capacity is essential for
  restoring viability and no excess capacity in the
  relevant market(s) exists

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Aid limited to the minimum (1)

• First use the firms own financial resources, the
  sale of assets and the external financing
  capability
• Avoid surplus cash which could be used for
  aggressive, market-distorting activities

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Aid limited to the minimum (2)

• The necessity of aid has to be demonstrated by
• Complying with the structure of the restructuring
  costs
• Stripping off the company
• Liquidity Plan
• Costs / Contributions
• Profit margin / ROI at the end of the
  restructuring period

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Own Contribution

• Contribution of private beneficiaries, investors
  and creditors to prove
• Viability of the restructuring plan
• Limitation of aid to the strict minimum necessary
• Threshold 50
• (Contributions of employees are discussed
  controversially)