Brussels, 09/04/2014 (Agence Europe) - On 9 April, the European Commission opened an in-depth investigation to assess whether €35 million of restructuring aid for the Cimos Group, a Slovenian manufacturer of automotive components, complies with EU state aid rules.
The Commission will examine in particular whether the planned aid will enable the company to become viable without continued public support and whether the company owners contribute sufficiently to the cost of restructuring.
In recent years, Cimos has experienced significant financial difficulties resulting mainly from liquidity problems linked to considerable bank debt which the company was unable to service. It is negotiating a debt restructuring agreement with its creditor banks. In July 2013 the Commission temporarily approved a €35 million rescue aid guarantee for Cimos, subject to a commitment by Slovenia to notify a restructuring plan capable of ensuring the long-term viability of the firm.
The Commission is concerned that the company owners may not sufficiently contribute to the restructuring cost. Some funding notified by Slovenia as own contribution by the company may actually come from state resources and involve additional state aid. Furthermore, the forecasts of the company's long-term viability may not be realistic and the proposed capacity reduction may not be adequate to compensate for the distortions of competition. (MB)