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}COM(76)70 final
Brussels.2ndMarch1976.
CONFIDENTIALCOMMISSION
OFTHE
EUROPEAN COMMUNITIES
Secretariat
COMMUNICATION FROM THE COMMISSION TO
THE COUNCIL
Request forareconversion loan under
Article 56oftheECSC Treaty forITALSIDER
S.p.A. .Italy (Valdarno project )
COM(76)70final

COMMISSION Doc *XVI/266/75-E
OFTHE
EUROPE AITCOMMUîTITIES
Brussels ,
COFPIEESTTIAL
COMMUNICATION TOTHE COUÎTCIL
Subject :Request forareconversion loan under Article $6,2a):,oftHe ECSC
Treaty forITALSILER S.p.A. ,Italy (Valdarno project )
I. ESSENTIAL INFORMATION
Member State :
Promoter :
Project :
Location :
..Investment :
Proposed loan ;
Employment :Italy
Italsider S.p.A.
Creation ofanewproduction line forcaterpillar
tracks
SanGiovanni diValdamo ,Tuscany
1,000 million lira (+1.14 mua)
300million lira (+0.34 mua)
Reconversion of24workers
II.THE COMPANY
Title :
Legal status :
Headquarters :
Capital :
Plant :
Total personnel :ITALSIIER S.p.A.
Limited Company
ViaCorsica ,4-16128 Genova
262,000,000 lira
Theprincipal shareholder isFinsider with 56.5%
Taranto ,Bagnoli ,Genova-Cornigliano ,Trieste ,
Marghera ,Valdamo ,Savona andLovere
52,000 people
Italsider isthelargest Italian steel company and isamong theten
largest steel companies intheworld .In1974 Italsider produced
86%ofItaly 'sfoundry products ,46%ofsteel andhotrolled products
and50J>ofcold rolled products .
TheCompany 'sfour year (l975-78)development plan provides fora
global investment of630,000 million lira fortheimprovement inthe
quality ofproduction andtheexpansion ofcapacity .This plan
includes thethroe reconversion projects forwhich financial support
hasbeen requested under Article 56oftheECSC Treaty .These involve
theGenova-Cornigliano ,Lovere andValdarno plants .

~2- XVI/266/75-E
III.THEPROJECT
TheplantatSanGiovannidiValdarnopresentlyproducesrolled
products,caterpillartracksandrailwayequipmentincludingpoints.
Thecompanyhasdecidedtoclosedownanobsoleterollingmillandto
transferthecorresponding productionpartlytoanotherplantand
partlytoathirdshiftonasecondrollinglineintheSanGiovanni
plant.Thetotalinvestmentintheplantis4»300millionlira(of
which1,000millionliracorrespondtotheexpansionofcapacityforcaterpillartracks)forwhichafirmlong-termorderhasbeen
obtainedfromalargemanufacturer ofheavyvehicles.
Totalproductionofcaterpillartrackswillbedoubled.
IV.ETTPLOYMEITT ASPECTS
Closingtheobsoleterollingmillwillresultin39redundancies of
which15willbetransferredtoathirdshiftonanotherrollingmill
and24willbetransferredtotheprojectafterextensivetraining
includingtheprogressive movementofanumberofthestaffto
differentassignements .
v.rmarciAL COÏTSIIERATIOITS
Italsider'sfinancialstructureisveryunbalanced ,becauseofits
largeindebtedness ;itsownresourcesonlycoveraverysmallpartof
fixedinvestment.Thissituationisduetotheconsiderable borrowing
thatthecompanyhasbeenmakingtocompletethesteel-making complex
atTaranto.However,the1973and1974resultscanbeconsidered
satisfactory sinceitisthefirsttimesince1969thataprofithas
beenmade.Furthermore ,theallocationtoamortisation whichwas
doubledbetween1972and1973wasfurtherincreasedin1974.The
financingplanfortheinvestmentprojectsforwhichtheproposed
loanshavebeenrequestedshowsthatabout^0%ofrequirementswillbe
coveredbyinternalcashgenerationand5O/0byincreasedmediumand
long-termborrowing.
VI.CONFORMITY WITHARTICLE56OFTHEECSCTREATY
Theproposedinvestmentwillprovideeconomically soundandsecure
employmentforthepeopleconcernedsinceItalsiderhassuccessful
experienceinthisbusinessandhasfirmordersfortheoutputofthe
newplant.ItisconsideredthatArtiole56canbeappliedinthis
casesinceitinvolvesthereconversion ofanumberofworkersfrom
theirpresentactivityintherollingmill,whichwillbeclosed,toa
newactivitynajnelytheexpandedproductionofcaterpillartracks.
•/.

-3- XVI/266/75-E
VII.CONCLUSION
(a)TheCommissionhasapprovedareconversion loanunderArticle
56§2(a)oftheECSCTreatyforItalsiderS.p.A.inanamount
of300millionlira(+0.34mua)oritsequivalent.Foran
amountofupto0.34millionEuropeanUnitsofAccounttherate
ofinterestwillbereducedby3percentagepointsforthefirst
fiveyearsafterthepaymentorpayments.
(b)TheCommissioninvitestheCounciltogiveitsassenttothe
foregoingdecision.