1999/339/EC: Commission Decision of 1 July 1998 on aid granted by Germany to Chemieanlagenbau Staßfurt (notified under document number C(1998) 2050) (Only the German text is authentic) (Text with EEA relevance)
Date: 1998-07-01
Institutions: European Commission
Subjects: Germany, State aid, aid for restructuring, aid to undertakings, control of State aid

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 1 July 1998

on aid granted by Germany to Chemieanlagenbau Staßfurt

(notified under document number C(1998) 2050)

(Only the German text is authentic)

(Text with EEA relevance)

(1999/339/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

transferred to the list of aid measures not notified, where
it was registered under number NN 24/97.

Having regard to the Treaty establishing the European
Community, and in particular the first subparagraph of
Article 93(2) thereof,

Having given notice to the parties concerned to submit
their comments, in accordance with that Article,

Whereas:

The Commission doubted whether the measure qualified
as restructuring aid compatible with the common market,
and on 2 April 1997 it decided to initiate proceedings
under Article 93(2) of the Treaty. Germany was informed
of the decision and the grounds for it by letter of 15 April
1997, the contents of which were published in the Offi-
cial Journal of the European Communities (1). Interested
parties were invited to submit their observations within
one month.

I

Germany replied to the Commission’s letter of 15 April
1997 by letter of 13 May 1997, registered on 16 May 1997.

By letter of 9 December 1996, registered by the Commis-
sion on 10 December 1996, the German Government
informed the Commission pursuant to Article 93(3) of the
Treaty that it proposed to grant aid to Chemieanlagenbau
Staßfurt AG (‘CAS'). The Commission entered the
measure on the register of State aid measures under the
number N 897/96. By letter of 15 January 1997 the
Commission sought additional
information, which was
supplied by letter of 21 February 1997, registered on 24
February 1997.

According to the Commission’s information, aid had
already been granted to CAS without awaiting the
response of the Commission. The case was accordingly

Following publication of
the notice in the Official
Journal of the European Communities on 26 June 1997,
the Commission received observations from a number of
interested parties: there was a letter from a trade associa-
tion, dated 23 July 1997, registered on 29 July 1997, and
a letter from a European interest group, dated 25 July
1997, registered on 29 July 1997. Further observations
arrived after the one-month deadline had expired: from
the office of the permanent representative of a Member
State, dated 28 July 1997, registered on 31 July 1997, and
from a competitor, dated 29 July 1997, registered on 31
July 1997.

(1) OJ C 196, 26.6.1997, p. 13.

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Copies of these letters were sent to the German authori-
ties for comment on 21 August 1997. They replied by
letter of 16 September 1997, registered on the same date.

CAS operates in two industries, that of plant and machi-
nery construction and that of iron casting. It sells 61,7 %
of its output within Germany, 10,5 % within the rest of
the common market, and 27,8 % in other countries.

By letter of 17 September 1997, registered on the same
date, Germany informed the Commission pursuant to
Article 93(3) of the EC Treaty that following the privatisa-
tion of the company, which had taken place on 2 July
1997, they were making changes to the aid package for
CAS. By letter of 12 March 1998, the Commission sought
additional information, which was supplied by letter of 16
April 1998,
registered on the same date. Germany
supplied further information by letter of 14 May 1998,
registered on 18 May 1998.

II

CAS has its registered office in Saxony-Anhalt; in 1997 it
had a workforce of 210, a turnover of DEM 20 356 000,
and fixed assets of DEM 48 589 000.

The origins of the company go back to 1863. In 1951 it
was renamed VEB Maschinen- and Apparatebau Staßfurt,
and later VEB Chemieanlagenbau Staßfurt. In 1990 it
became Chemieanlagenbau Staßfurt AG. Its shares were
held by the Treuhandanstalt privatisation agency until
1993, and thereafter by H. W. Urban GmbH & Co.
Management KG Berlin, which was itself owned by the
Treuhandanstalt and then its
the
Bundesanstalt fair vereinigungsbedingte Sonderaufgaben,
and which acted for both agencies,
the
management of CAS in July 1992. In April 1996 CAS
became the property of Beteiligungs-Management Gesell-
schaft Berlin mbH (‘BMGB'), which was entrusted with
the task of privatising it. The same year BMGB instructed
West Merchant Bank to identify potential private
investors. Sale was by open invitation to tender. BMGB
selected the most favourable and credible offer.

successor agency,

taking over

On 2 July 1997 CAS was sold to the private investor BVT
Industrie-Beteiligungsgesellschaft mbH (‘BVT') at a price
of DEM 500 000. The German authorities made a loss of
DEM 28 994 000 on the privatisation; if the company had
been wound up,
loss would have been DEM
36 968 000. BVT took over certain of CAS’s liabilities to
third parties. BVT forms part of the BVT group, which
has its seat in Munich and invests in the energy and
environmental sector in Germany (2).

their

(2) The BVT group also has an 80 % stake in Sodawerk Staßfurt
AG, with an option on the remaining 20 %. Sodawerk Staß-
furt manufactures soda ash, sodium and related substances. Its
share of the German market in these products is about 20 %,
and its share of the European market is about 8 %.

On the plant and machinery side, CAS builds, supplies
and installs plant for the manufacture of light ash, dense
ash and potash. Its rotating drums are used for many
purposes,
for example in the fertiliser industry, waste
recycling, non-metallic minerals and the timber industry.

On the iron foundry side, CAS makes iron castings for its
own use and for outsiders. These include alloy and non-
alloy grey cast iron and spheroidal graphite cast iron; the
grey iron castings may weigh between 10 kilograms and
40 tonnes, and the spheroidal graphite castings between
10 kilograms and 16 tonnes. These are small runs of
items made to order.

Iron foundries fall under Annex I to the ECSC Treaty.
They are outside the scope of the 1988 framework for
certain steel sectors not covered by the ECSC Treaty (3).
They can accordingly be treated like any other industry
within the scope of the EC Treaty.

III

The original notification, in December 1996, related to
DEM 44 000 000 in aid for BMBG, in two forms. There
was to be a cash injection of DEM 27 300 000, and DEM
16 700 000 in guarantees. In the course of the privatisa-
tion, in July 1997, minor changes were made to this
package of aid by BMBG, bringing the total down to
DEM 42 388 000. Both the original and the amended aid
packages were intended to ensure the survival of CAS and
to promote its further restructuring, and to carry out
reorganisation measures drawn up by management
consultants towards the end of 1995, which have for the
most part been implemented according to plan.

The aid measures as amended in connection with the
privatisation are as follows:

(3) OJ C 320, 13.12.1988, p. 3.

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Measure

DEM

Redundancy payments in the event of a reduction from 180 to 150 employees

450 000

Waiver of claim to repayment of sums paid out for specific purposes (payments for
social plan funding in 1994 and 1995)

12 002 000

Waiver of claim to repayment in respect of consultancy services provided by
BMGB

Assumption of liability for debt, including interest

Grants in respect of estimated losses for 1997 to 1999

892 000

10 044 000

19 000 000

Total

42 388 000

Apart from these measures, BMBG also waived a claim for
repayment of a shareholder loan of DEM 73 156 000
provided by the Treuhandanstalt, and of a sum of DEM
4 480 000 granted to clear up inherited environmental
problems on the site. The waiver of the shareholder loan
does not amount to additional aid, because the loans and
guarantees provided by
the Treuhandanstalt were
intended for firms in particular difficulty, and it was
accepted at the time they were granted that those firms
might not be able to repay them. In cases of that kind it
was safe to assume that the potential aid intensity was
100 %. This assumption proved correct in CAS’s case; to
waive the repayment of so risky a loan cannot be regarded
as fresh aid. When it initiated the Article 93(2) proceed-
ings, the Commission accepted that the aid granted by
the Treuhandanstalt was in accordance with the relevant
guidelines (4). The financing of inherited environmental
liabilities (Altlasten)
is not considered to be State aid
within the meaning of Article 92(1) of the EC Treaty (5).

doubt

the outset of

At
the Commission
the proceedings
accepted that other aid paid by the Treuhandanstalt in the
past had also been granted in accordance with the State
aid rules in force at the time (6). This consisted of DEM
93 300 000 in 1994 and DEM 44 000 000 in 1995. But
the Commission expressed
regarding what
appeared to be the unnotified waiver of a claim to repay-
ment of a shareholder loan of DEM 20 000 000. This
question has since been clarified by the German authori-
ties. The DEM 93 300 000 granted in aid in 1994
consisted essentially of loans and guarantees. Out of this
sum CAS did not make use of DEM 20 000 000, and took
up only DEM 73 156 000. This was the figure referred to
in the German Government’s letter of 17 September 1997
providing details of the privatisation and the amount of
the shareholder loan.

(4) For aid before 31 December 1994, see the Commission Deci-
sions on Treuhandanstalt operations in Cases NN 108/91 and
E 15/92. For aid in 1995, see also the Commission Decision
on Treuhandanstalt operations in Case N 768/94.

(5) See Case NN 108/91.
(6) See footnote 4.

initiated the proceedings

When it
the Commission
expressed concern at what appeared to be the grant of
further guarantees to CAS in 1996; Germany has given
assurances that there were no such guarantees.

Germany has stated that out of the aid covered by this
Decision a sum of DEM 5 957 000 was paid out prior to
approval by the Commission.

IV

After the publication of the letter from the Commission
to Germany initiating the proceedings, several interested
parties submitted observations. The Committee of Euro-
pean Foundry Associations argued that there was excess
capacity in the industry, and consequently that CAS,
which was an iron foundry, should not be given any State
aid. The Association did not submit any specific data for
the industry. A firm competing with CAS alleged that it
had lost contracts to CAS because of predatory pricing. It
did not supply any specific information either. A national
trade association supported the allegations made by the
competitor, in a brief letter which did not give details.
The office of the permanent representative of a Member
State submitted that CAS was considerably less efficient
than the competitor already referred to, and consequently
ought not to receive any State aid. This letter did supply
it represented CAS as an iron
some arguments, but
foundry only, whereas in both relative and absolute terms
iron casting is only a minor part of its business.

These letters were passed on to Germany for comment. It
replied by letter of 16 September 1997, arguing that the
aid given to CAS was the indispensable minimum needed
to carry out the restructuring, and that CAS consequently
had no excess finance available to be able to act in a way
that distorted the market. CAS had not misused funds for
anti-competitive conduct. The privatisation would not

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increase capacity in the iron casting industry. The ques-
tion of excess capacity is addressed in Section VII, which
concludes that CAS has carried out a permanent reduc-
tion in casting capacity in line with the 1995 restruc-
turing plan. As part of the restructuring to be carried out
under the plan, capacity has also been reduced on the
plant and machinery side.

V

initiated the proceedings

When it
the Commission
explained why it was that the EC Treaty and in particular
Article 92(1) applied in this case. Although the aid
package has since been amended, the same considerations
apply. As the Commission commented in the notice
announcing the proceedings,
the aid package can be
declared compatible with the common market only under
the exemption in Article 92(3)(c). The conditions in
which aid may qualify for exemption under this provision
have been clarified in the Community guidelines on State
aid for rescuing and restructuring firms in difficulty (‘the
guidelines') (7).

result

The notification has accordingly to be considered in the
light of paragraph 3.2 of the guidelines, which deals with
aid for restructuring. The aid must restore the long-term
viability of the recipient firm within a reasonable time. It
must not
in any unacceptable distortion of
competition. If there is excess capacity in the relevant
market, the recipient will generally be expected to reduce
capacity. The costs and benefits of
the restructuring
operation must be in reasonable proportion. The restruc-
turing plan must be implemented in full, and the
Commission must be kept informed of progress.

initiated the proceedings

the Commission
When it
explained which aspects of the aid and of the restruc-
turing plan gave rise to doubt and which aspects did not.

VI

The guidelines state that the restructuring must restore
the long-term viability of the firm within a reasonable
time. When it initiated the proceedings the Commission
drew attention to several difficulties in applying this test
to the restructuring of CAS. First, there was no informa-
tion to show what practical restructuring measures had to
be taken, and which had already been carried out.
Secondly, there were no forecasts of results after 1998, so
that it could be supposed that the company’s losses would
continue. Thirdly, there were no expressions of interest
on the part of private investors, so that there was no
guarantee that aid would need to be granted only once,
since a privatisation was a typical case where a final
State-aided restructuring operation might be called for.
The suspicion also persisted that loans to CAS amounting
to about DEM 20 million had been covertly written off.

The original notification submitted by the German
authorities in December 1996 described the restructuring
plan drawn up at the end of 1995 only in very general
terms;
the German authorities have since provided
detailed information on the individual measures envis-
aged in the plan and on progress with their implementa-
tion. The restructuring plan is based on an assessment of
CAS carried out by management consultants in mid-1995,
with the object of finding a suitable private investor. Their
report drew attention to a number of problems: the loss of
markets in central and eastern Europe, an industrial site
the lack of effective management
that was overlarge,
structures, uncertainty as to which were the most profit-
able aspects of the supply of plant to potash and soda ash
manufacturers, and poor supervision of
financing and
prices.

On the basis of this assessment a number of short- and
medium-term measures were programmed in the restruc-
turing plan drawn up at the end of 1995, and were imple-
mented between the end of 1995 and 1996. These
included the following:

The Commission expressed doubts whether the condi-
tions laid down in the guidelines were met. Its objections
were of three kinds. First, at the time of the original
notification it was questionable whether a private investor
could be found for CAS, and it was to be expected,
therefore, that further aid might have to be granted, or
that the restructuring plan might not be implemented in
full. This also made it difficult to assess the costs and
benefits of the restructuring operation. The second uncer-
tainty arose out of the then state of the iron casting
market. If there was overcapacity, CAS would have to be
required to dismantle capacity irreversibly. Lastly, there
were points where the information supplied by Germany
was unclear and suggested that CAS might have received
more aid than had been notified.

(7) OJ C 368, 23.12.1994, p. 12.

(a) Proper costing methods were introduced for the selec-
tion of contracts
their
performance, in order to prevent a repetition of a case
where a contract concluded in 1995 resulted in a loss
of DEM 15 000 000.

and the monitoring of

(b) New costing and monitoring mechanisms have made
it possible to ascertain and focus on CAS’s core skills
and to apply them to new products. Identifying its
most profitable activities has enabled CAS to concen-
trate on the production of key components and the
sale of its know-how, rather than relying on building
the
and installing entire plants. An example is
production of columns for distillation, absorption and
carbonisation. With the application and marketing of
rotating drums in the environmental sector, CAS’s

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is

uses

investigating

core skills are being applied to new markets. The
company
high-
performance filters outside the production of soda ash.
On the foundry side, new product lines are being
developed in collaboration with potential customers,
including for example parts for wind-power generators
or coke-oven jets.

for

its

(c) Land that is not needed has been sold: CAS’s site now
covers only one-third of its previous area. Alongside
the sell-off of land, the design centre in Halle has
been sold to a private firm for DEM 400 000. The
there was no aid
state that
German authorities
involved. Concentration of operations in a smaller

area has also reduced internal transport costs. The
rearrangement of the site has also led to an irrever-
sible reduction in the capacity of the foundry, which
is described below.

(d) At

the beginning of 1990 CAS had about 3 000
employees. By 1997 this figure had fallen to 210, in
line with the plan. The gradual reduction in the work-
force has entailed costs of DEM 87 000 000.

In response to the Commission’s criticisms regarding a
lack of information as to future performance, especially
after 1998, the German authorities have now supplied
projections up to the year 2000.

1997

1998

1999

2000

Turnover

31 515 000

39 200 000

43 120 000

47 432 000

Other revenue

2 072 000

3 972 000

500 000

500 000

Total renevue

33 587 000

43 172 000

43 620 000

47 932 000

Expenditure on materials

22 475 000

26 180 000

23 613 000

22 135 000

Expenditure on staff

17 340 000

16 100 000

13 500 000

13 500 000

Operating profit or loss

– 16 953 000 – 9 908 000

– 4 338 000

1 305 000

According to the projected profit-and-loss accounts, CAS
can expect an operating profit of DEM 1 305 000 in the
year 2000.
should make pre-tax profits of DEM
221 000 in 1999 and DEM 1 202 000 in 2000. These
figures do indicate a return to viability.

It

The sale of CAS to BVT, in July 1997, dispelled the
Commission’s doubts about compliance with the ‘one
time last time' principle. A private investor has taken over
the firm, and the suspicion that further funding might be
needed for restructuring on the occasion of a future priva-
tisation has proved groundless.

markets; and privatisation has enabled cost savings to be
made, as plant and facilities have been used jointly with
the new parent company.

Under the circumstances, the Commission concludes that
the German authorities have satisfactorily allayed all the
doubts considered in this Section.

VII

The Commission’s doubts regarding additional aid which
might not have been notified have been discussed in
Section III.

The aid measures which were notified, and which were
amended in connection with the privatisation, give rise to
no further doubts here, for the following reasons. The
restructuring measures have for the most part been imple-
mented in accordance with the 1995 plan; CAS’s results
are on the whole developing as anticipated; no major
restructuring measures are planned in connection with
the privatisation, apart from the effort to open up new

A second condition in the guidelines is that the aid must
not lead to undue distortion of competition. Especially in
industries where there is excess capacity, a firm receiving
restructuring aid will as a rule be expected to dismantle
capacity so as to protect competitors. CAS operates in two
industries, namely plant and machinery and, to a lesser
extent, iron casting.

In its letter to the German authorities of 17 April 1997,
announcing the initiation of proceedings pursuant
to
Article 93(2) of the Treaty, the Commission expressed
particular concern at evidence existing at the time of the
assessment of overcapacity in the iron-casting industry in
the relevant period.

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Germany states that during the restructuring of CAS’s
plant and machinery business in 1995 and 1996, CAS
reduced capacity from 230 000 machine-hours a year in
1995 to 66 000 machine-hours in 1996. This was achieved
by discontinuing several product lines, including small
machines and stainless steel products produced using
carbide technology, and the filter operation. The work-
force actively engaged here fell from 175 in 1995 to 70 in
1996. The permanent team working in labour-intensive
plant building was also reduced from 40 in 1995 to 20 in
1996. In line with the restructuring plan drawn up at the
end of 1995, the overall staffing of the plant and machi-
nery operation (including distribution, quality control and
administration) was reduced from over 370 in 1995 to
around 150 in 1997.

The share of iron casting in CAS’s total turnover was put
at no more than 15 % in 1997, at DEM 5 million out of
DEM 31 515 000. The total output of the iron foundry
will remain static, so that in relative terms its share of
total sales will fall to about one tenth by 2000. Of the
roughly 210 employees at CAS, less than 60 are employed
in the iron foundry.

to
when among other
restructure capacities and employment which had been
taken in the preceding years began to have their effect (11).

far-reaching measures

things

The German authorities have now provided details of the
irreversible reduction in capacity made by CAS in the
period referred to, as required by the guidelines in order
against undue distortion of
to protect competitors
competition. CAS reduced its foundry capacity from
4 500 tonnes a year in 1995 to 3 500 in 1996. This is an
irreversible reduction in capacity,
the following
reasons.

for

The cooling area of the works has been cut back; this
reduces overall capacity, because the cooling section is a
bottleneck in the firm’s production cycle. After casting,
the castings must cool before they can be sold or
processed further. Cooling normally takes place in sand-
pits. In CAS’s case these sandpits were located in a large
shed, in order to keep the sand dry and to maintain an
even temperature. As part of the restructuring of the site a
wall has been built dividing this cooling shed into two. In
the part of the shed no longer used for cooling, the floor
has been concreted over. This area is now used for storing
moulds, which are an important element in the produc-
tion process. The area available for production has been
reduced from 3 900 m2 to 2 300 m2.

The reduction is permanent, because to return this area to
its old use would require considerable rebuilding work
and conversion, and an interruption in the production
process, and would also cause difficulties with the storage
of the casting moulds.

As regards the capacity of
the iron casting industry,
covering the production of alloy and non-alloy grey iron
and spheroidal graphite iron castings, the most recent
available information suggests that there was in fact no
structural overcapacity in the relevant period, i.e. between
the end of 1995 and the end of 1996, and that there has
been none since. There had indeed been excess capacity
in this area for many years. Between 1989 and 1996 some
300 European iron foundries were closed, 100 of them in
the new German L(cid:132)nder alone (8). Over the same period
about 50 000 jobs were lost
in this labour-intensive
industry. The wave of redundancies has now come to an
end (9). The problem of overcapacity is also reflected in
the decline in production from 9 628 000 tonnes in 1990
to 8 007 000 tonnes in 1993; this was reversed in 1994,
when it reached 8 873 000 tonnes (10). Structural overca-
pacity continued to exist until the beginning of 1994,

(8) Source: Committee of European Foundry Associations, annual

reports.

(9) Source: Panorama of European Industry 1997.
(10) Source: Committee of European Foundry Associations, annual

reports.

CAS is located in an area which qualifies for aid pursuant
to Article 93(2)(a) of the Treaty (12). Under the guidelines
the Commission may accept a smaller
reduction in
capacity in such areas than it would require of firms in
regions not covered by that provision.

The Commission accordingly concludes, first, that CAS
was not required to dismantle capacity in its foundry in
order to avoid undue distortion of competition, and,
second, that a permanent reduction in capacity was none-
theless carried out under the terms of the 1995 restruc-
turing plan. The Commission notes that there was also a
reduction in the capacity of the plant and machinery
operation. The conditions laid down in the guidelines in
respect of capacity and capacity reductions are conse-
quently met.

(11) Source: Panorama of European Industry 1997.
(12) See State aid measure No N 464/93.

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VIII

The aid must be limited to the minimum needed to
enable restructuring to be undertaken, and must be
related to the costs and benefits of restructuring. There
must not be excess funds remaining which the firm could
use to follow aggressive, market-distorting policies. The
is expected to make a contribution to the
investor
financing of the restructuring from his own resources.

When it initiated the proceedings, however, the Commis-
sion felt it was questionable whether a meaningful cost-
benefit analysis could be carried out at that stage, for two
reasons. First, there was a lack of information on the
prospect of restoring the firm’s viability within a reason-
able time (13). As has already been said, the missing infor-
mation has since been supplied.

The second reason was the suspicion that additional aid
might have been granted, in the form of guarantees, but
not notified. This might have happened either because
the restructuring costs were greater than those which had
been stated by the German authorities, or because excess
State aid had been provided. As has been explained, this
suspicion has now been allayed (14).

At the time the proceedings were initiated there was no
private investor in view, and the Commission accordingly
presumed that CAS would not be in a position to make
an appropriate contribution of its own. Now that CAS has
been taken over the position has changed.

this

The total cost of restructuring CAS comes to DEM
includes DEM 77 636 000 already
158 422 000;
the
exempted under the Treuhandanstalt scheme. Of
remaining DEM 80 786 000,
the private investor has
provided DEM 38 898 000. This includes the assumption
of liability for the repayment of loans of DEM 2 076 000,
the provision of DEM 26 300 000 in guarantees, a capital
injection of DEM 8 000 000, and a payment of DEM
1 520 000 towards making good inherited problems.

investor’s

the
Including the purchase price of DEM 500 000,
private
to DEM
contribution
38 898 000; the remaining DEM 42 388 000 has been met
out of State resources. The investor’s total contribution
thus covers about 25 % of the cost of restructuring, and

amounts

(13) See Section V.
(14) See Section III.

breaks down into a payment of DEM 1 520 000 towards
making good environmental damage on the site,
the
assumption of liability for the repayment of loans of DEM
2 076 000, the provision of a back-to-back guarantee of
injection of DEM
DEM 26 300 000, and a capital
8 000 000. This is a fair contribution on the part of the
investor.

The Commission concludes that this condition in the
guidelines is now met.

IX

A further condition in the guidelines is that the restruc-
turing plan must be implemented in full. When the
proceedings were initiated there was no investor
in
prospect, and Germany consequently could not rule out
the possibility that changes might have to be made to the
restructuring plan in order to reach agreement with an
investor. Now that the privatisation has taken place and
the 1995 restructuring plan has largely been imple-
mented, this question is no longer pertinent.

Germany has given assurances that the private investor
has complied with the 1995 restructuring plan and will
complete the parts still remaining. It has also confirmed
that the investor is required to submit regular reports on
the implementation of the restructuring plan and the
future development of CAS.

The Commission is therefore satisfied that this condition
in the guidelines is also met.

X

When it initiated the proceedings the Commission raised
no other doubts regarding the applicability of the guide-
lines in CAS’s case. It must also be observed that CAS is
located in an area covered by Article 93(2)(a) of the EC
Treaty. In the circumstances, and after considering the
fresh information submitted to it, the Commission is
satisfied that all the conditions for the applicability of the
guidelines are now met.

The Commission nevertheless notes that
the German
authorities paid out a sum of DEM 5 957 000 in breach of
their duty pursuant to Article 93(3) of the EC Treaty,

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HAS ADOPTED THIS DECISION:

Article 1

The following new aid measures taken by Beteiligungs-Management Gesellschaft Berlin
mbH to assist Chemieanlagenbau Staßfurt AG are compatible with the common market:

Measure

DEM

Redundancy payments in the event of a reduction from 180 to 150 employees

450 000

Waiver of claim to repayment of sums paid out for specific purposes (payments for
social plan funding in 1994 and 1995)

12 002 000

Waiver of claim to repayment in respect of consultancy services provided by
BMGB

Assumption of liability for debt, including interest

Grants in respect of estimated losses for 1997 to 1999

892 000

10 044 000

19 000 000

Total

42 388 000

Article 2

Germany must submit annual reports on the implementation of the restructuring measures
in accordance with the Community guidelines on State aid for rescuing and restructuring
firms in difficulty.

This Decision is addressed to the Federal Republic of Germany.

Article 3

Done at Brussels, 1 July 1998.

For the Commission

Karel VAN MIERT

Member of the Commission