Brussels, 13/12/2002 (Agence Europe) - On 11 December, the European Commission approved rescue aid for the German electronics manufacturer Grundig AG.
End-September 2002, Germany notified its intention to grant rescue aid in favour of the company that was close to bankruptcy. This aid consists in a 90% guarantee covering a loan of over EUR 45 million for a six-month period. The German Land of Bavaria will provide the guarantee, and a consortium of five German banks is providing the underlying credit.
The aid meeting the conditions set in "Community Guidelines on State aid for rescuing and restructuring firms in difficulty", the Commission approved the guarantee of the loan, as long as Germany undertook to submit a restructuring plan or liquidation plan within the six-month period and submits proof that the rescue loan had been reimbursed in full six months after disbursement of the last instalment to Grundig.
You may recall that in virtue of the aforementioned guidelines, the Commission approves aid to reconstruction in the form of a single cash injection in the ailing company to keep it afloat for the time it takes to carry out the restructuring plan. Aid must be limited to short-term liquidity support, granted at an interest rate reflecting market conditions.
The amount of the rescue loan must be restricted to the minimum necessary to keep the firm in business for a maximum period of six months. In a press release, moreover, the Commission states that any further aid given to restructure the company will, at a later stage, be assessed on its own merits.