Brussels, 26/07/2001 (Agence Europe) - The European Commission has decided to open a formal State aid investigation procedure on measures taken by the Dutch authorities to support restructuring of Koninklijke Schelde Groep (KSG) and the subsequent sale of the company to Damen Shipyards for a symbolic florin. The measures concern capital injections of EUR 47.7 million and an interest-free loan of EUR 20.4 million for the relocation of the military activities of the yard. The Commission doubts that the measures taken in favour of shipbuilding can be justified under the guidelines for rescue and restructuring aid to firms in difficulty and the shipbuilding regulation. For their part, the Dutch authorities maintain that these measures are a cheaper solution than KSG's bankruptcy. The main business of KSG is to operate a mixed military/civil shipyard, but the group is also active in ship repair, the production of gears and machinery, marine services and specialised tools. Until its sale to Damen in 2000, it belonged to the State. The large part of KSG's current business consists of work for the Dutch navy. It builds various types of ships and is active in ship repair and related services. During recent years, KSG encountered difficulties and, in 1998, in order to safeguard the construction of military frigates, the Dutch authorities provided subordinated loans of EUR 15.9 million and an additional advance payment on the frigates of EUR 6.8 million. In February 2000, the State and Damen agreed on the basic principles of the takeover, and KSG was sold to Damen, while benefiting from several support measures which, according to the Dutch authorities, come within the scope of Article 296EC relating to measures needed for the protection of essential security interests. Unless it receives all the information required, the Commission cannot rule out the existence of State aid and has therefore decided to open an investigation in this connection.