Report from the Commission to the European Parliament on the implementation of budget heading B5-504 "Measures to assist the phasing-in in the general budget of the activities financed through the ECSC"
Date: 2004-03-19
Institutions: European Commission
Subjects: Belgium, France, Germany, United Kingdom, coal industry, development region, general budget (EU), industrial restructuring, iron and steel industry

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 19.3.2004 
COM(2004) 180 final 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT 

on the implementation of budget heading B5-504 "Measures to assist the phasing-in 
in the general budget of the activities financed through the ECSC" 

EN 

   EN 

 
 
 
  
TABLE OF CONTENTS 

1. 

1.1 

1.2 

1.3 

1.4 

Introduction ................................................................................................................ 3 

Legal basis.................................................................................................................... 3 

Objectives..................................................................................................................... 4 

Budgetary aspects......................................................................................................... 4 

Human resources .......................................................................................................... 5 

2. 

Project Development .................................................................................................. 5 

2.1. 

Initial implementation analyses.................................................................................... 5 

2.2 

2.3 

3. 

3.1 

3.2 

4. 

4.1 

4.2 

4.3 

4.4 

5. 

6. 

6.1 

6.2 

6.3 

6.4 

7. 

8. 

New approach and finding of project partners ............................................................. 5 

Stages of implementation of the "EUROFER Guarantee Fund".................................. 6 

Project Partners.......................................................................................................... 6 

EUROFER.................................................................................................................... 7 

Financial Intermediaries (FIs) ...................................................................................... 7 

Implementation Instruments..................................................................................... 9 

The Fiduciary and Management Agreement (FMA) between the European 
Commission and EUROFER........................................................................................ 9 

The Guarantee Agreements between EUROFER and the Financial 
Intermediaries (FIs) ...................................................................................................... 9 

The Guarantees (Letters of Guarantee) ...................................................................... 10 

The Trust Account...................................................................................................... 11 

Project Monitoring................................................................................................... 11 

Results ....................................................................................................................... 11 

Use of funds ............................................................................................................... 11 

Structure of Beneficiaries........................................................................................... 12 

Job Creation................................................................................................................ 12 

Defaults ...................................................................................................................... 13 

Evaluation ................................................................................................................. 13 

Conclusion................................................................................................................. 14 

Annex:  Comments of the budgetary authority on budget heading B5-504 ............................ 15 

2

 
 
1. 

INTRODUCTION 

Budget heading B5-504 ("Measures to assist the phasing-in in the general budget of 
the activities financed through the ECSC" - see Annex) provides EUR 2 million for a 
pilot project to test the feasibility of measures in favour of regions "where industrial 
restructuring  is  taking  place  in  the  coal  and  steel  industries".  It  was  implemented  in 
2001 by setting up a guarantee fund to support job creation in the targeted regions. 

The guarantee fund is managed through a trust account on behalf of the Commission 
by EUROFER, the European Confederation of Iron and Steel Industries. EUROFER 
has  issued  guarantees  partially  covering  loans  and  equity  investments  made  by 
specialised  financial  intermediaries  to  innovative  SMEs,  including  start-ups,  in 
regions "where industrial restructuring is taking place in the coal and steel industries". 

In  order  to  ensure  maximum  economic  efficiency  of  the  pilot  project  within  the 
budgetary  ceiling  of  EUR  2  million,  it  was  necessary  to  limit  its  geographical 
coverage  to  certain  EU  Member  States  and  regions.  These  regions  are  situated  in 
Belgium (Wallonia), France, Germany (Dortmund) and the United Kingdom. 

As the majority of the traditional hard coal regions in Belgium, France, the UK and 
Germany fall within the regional coverage of the project, the interests of the EU hard 
coal industry have also been served by this approach. 

A guarantee fund was considered the most suitable instrument for implementing this 
budget heading, as it has greater leverage than direct loans or grants. The purpose of 
these guarantees is to support the creation of new jobs by facilitating access by SMEs 
in these regions to investment capital (loans and/or equity investments). 

The main objective of the new instrument is to give continuing redevelopment support 
to coal and steel regions after the expiry of the ECSC Treaty in July 2002. 

cooperation  with 

EUROFER’s 
(financial 
intermediaries) specialised in the field of SME support and job creation contributed to 
the success of this pilot project. The pilot project demonstrated, at this stage, that this 
instrument meets a corresponding market need. 

experienced 

external 

partners 

1.1. 

LEGAL BASIS 

This  second  report  is  submitted  to  the  European  Parliament  following  the 
requirement  of  the  first  report1,  based  on  the  comments  of  the  budgetary 
authority  in  1999  to  budget  heading  B5-504N  of  the  general  budget  of  the 
EU for the year 20002. 

In  accordance  with  Point  37(a)(i)  of  the  Interinstitutional  Agreement  of  6 
May  1999  between  the  European  Parliament,  the  Council  and  the 
Commission  on  budgetary  discipline  and  improvement  of  the  budgetary 

1 
2 

COM 2002 154 final 10/04/2002 p. 13, point 5.2. 
see Annex. 

3 

 
 
  
 
                                                 
procedure3 no specific legal basis is required for the implementation of this 
budget heading, because it is a pilot project.  

1.2 

OBJECTIVES  

1.2.1  General objective 

The  general  objective  of  the  measures envisaged under budget heading B5-
504  was  to  finance  measures  to  facilitate  the  transition  from  activities 
traditionally financed from the ECSC budget to programmes existing in the 
general budget, particularly the Structural Funds and research. It has the aim 
of  promoting  the  establishment  of  innovative  enterprises  (SMEs)  linked  to 
the industrial conversion of the coal and steel regions. 

1.2.2 

Specific objective 

The specific objective of the pilot project is to stimulate job creation in EU 
regions  where  industrial  restructuring  is  taking  place  in  the  coal  and  steel 
industries by supporting the investment activities of innovative SMEs. 

1.3 

BUDGETARY ASPECTS 

Commitments in EUR million: 

Year 

2001 

2002 

2003 and 
subsequent years 

TOTAL 

2,0

0,0

0,0 

2,0 

Payments in EUR million: 

Year 

2001 

2002 

2003 and 
subsequent years 

TOTAL 

1,5

0,5

0,0 

2,0 

Calculation of cost: 

The  amount  of  EUR  2  million  is  a  maximum  amount.  The  exact  total  cost, 
which  must  not  exceed  EUR  2  million,  is  expected  to  be  much  lower  than 
that amount as results to date could indicate that guarantee calls are unlikely 
to be exceptionally high. 

3 

OJ C 172, 18.6.1999, P1. 

4 

 
 
  
 
 
 
                                                 
1.4 

HUMAN RESOURCES 

Since  the  Guarantee  Fund  itself  is  managed  by  EUROFER,  monitoring  by 
the Commission did not require any additional staff and could be met in this 
particular  case  by  employing  Commission  staff  formerly  engaged  in  the 
management of the ECSC loan scheme. 

2. 

PROJECT DEVELOPMENT 

2.1 

INITIAL IMPLEMENTATION ANALYSES 

Following  contacts  between  several  Directorates-General  (e.g.  DG  ECFIN, 
DG  EMPL,  DG  ENTR,  DG  REGIO,  DG  RTD,  DG  BUDG,  DG  FC),  the 
implementation  of  the  budget  heading  was  entrusted  to  DG  ECFIN  in 
November 1999. 

The  initial  implementation  analyses  made  in  late  1999  and  in  spring  2000 
came  to  the  conclusion  that  it  was  not  possible  to  implement  the  budget 
heading within the budgetary ceiling of EUR 2 million and still cover the full 
range  of  all  EU  Member  States  plus  all  candidate  countries  as  proposed  by 
the EP Committee on Budgets. 

2.2 

NEW APPROACH AND FINDING OF PROJECT PARTNERS 

For  the  reasons  outlined  above,  a  new  approach  had  to  be  found  to  make 
implementation  of  this  budget  heading  feasible.  For  practical  purposes  and 
given the small resources, the pilot project was limited to 4 member states in 
which the restructuring of the coal and steel industries had the most serious 
consequences. 

In  order  to  achieve  maximum  cost  effectiveness  and  a  high  leverage,  a 
guarantee instrument was considered the most appropriate solution. Already 
existing  guarantee funds,  such  as  the SME Guarantee Facility (managed by 
the  European  Investment  Fund)  in  the  framework  of  the  Growth  and 
Employment Initiative4 had already proved their effectiveness. 

Discussions  with  the  EIF  and  the  EIB  indicated  that  these  institutions  were 
reluctant  to  take  over  the  management  of  a  specialised  fund  of  this  size. 
Therefore,  a  non-profit  oriented  partner  was  sought  who  was  both  able  and 
willing  to  manage  such  a  fund.  Apart  from  the  EIF  and  the  EIB,  several 
associations  and  companies  in  the  coal  sector5  were  contacted  but  also 
declined this cooperation offer. 

4 
5 

Council Decision 98/347/EC OF 19.5.1998, OJ L 155, 29.5.1998, p. 43. 
E.g.  CESCO 
Steinkohlebergbaus, Essen and RAG Coal International, Essen. 

(European  Solid  Fuel  Association),  Gesamtverband 

des 

deutschen 

5 

 
 
  
 
                                                 
In  September  2000  an  initial  provisional  agreement  concerning  the 
management of the guarantee fund was reached with EUROFER6, which has 
its headquarters in Brussels. 

EUROFER  was  the  most  realistic  option  owing  to  its  broad  representation, 
its  long  experience  in  handling  major  projects,  including  those  co-financed 
by the European Commission, and its ability to co-operate with experienced 
intermediaries in the very specific field covered by the project 

2.3 

STAGES OF IMPLEMENTATION OF THE "EUROFER GUARANTEE FUND" 

this 

the  formal  approval  of 

implementation  proposal  by 
Following 
Commission  Decision  PE/2000/2821  of  22  December  20007,  the  Fiduciary 
and  Management  Agreement  (FMA)  between 
the  Commission  and 
EUROFER  was  signed  on  29  March  2001.  In  April  2001  the  Commission 
transferred the first tranche of the funds (EUR 1,5 million) to the EUROFER 
trust account established for this purpose. The remaining tranche of EUR 0,5 
million was transferred in September 2002. 

loans  or  equity 

Under the provisions of the FMA, EUROFER has agreed to issue guarantees 
to  partially  cover 
investments  made  by  Financial 
Intermediaries  (FIs)  to  innovative  SMEs  in  regions  where  industrial 
restructuring  is  taking  place  in  the  coal  and  steel  industries.  Four  FIs  have 
been selected by EUROFER and accepted by the Commission in conformity 
with  paragraph  7  of  the  Communication  annexed  to  the  Commission 
Decision PE/200/2821 of 22 December 2000. They are: 

1. 

2. 

SODIE France 

SODIE S.A. Belgium 

3.  UK Steel Enterprise Limited 

4.  Venture Capital Dortmund GmbH ("Dortmund Project") 

The framework agreements between EUROFER and these FIs were signed in 
October and November 2001. The first guarantees were issued by EUROFER 
in February 2002 and the last ones in September 2003. 

3. 

PROJECT PARTNERS 

The good reputation of EUROFER and the successful track record of the FIs 
involved, contributed to the Commission's decision to implement the project 
in this way and with these partners. 

6 

7 

EUROFER was explicitly designated as project manager in the first article of the Commission 
Decision PE/2000/2821 of 22 December 2000. 
Not published in the OJ. 

6 

 
 
  
 
                                                 
3.1 

EUROFER 

The  European  Confederation  of  Iron  and  Steel  Industries  (EUROFER)  was 
founded in 1976. Members and Associate Members are steel companies and 
national steel federations throughout the European Union and the Central and 
Eastern European Countries. 

EUROFER represents 95% of the total productions of crude steel in the EU. 
The Associate members in Central and Eastern European Countries account 
for 95% of the total steel production in this region. 

The  objectives  of  EUROFER  are  cooperation  between  the  national 
federations and companies in all matters that contribute to the development 
of  the  European  steel  industry,  and  the  representation  of  the  common 
interests  of  its  members  vis-à-vis  third  parties,  notably  the  European 
institutions and other international organisations. 

EUROFER  possesses  considerable  experience  and  proven  qualifications  in 
handling major projects, such as: 

"Business Support Programme" 

(Adaptation  support  to  Central  and  Eastern  European  steel  federations  in 
view of their countries' accession to the European Union) 

Period: 

July 2000 to June 2002 

Total budget: 

EUR 1.100.000 

EC contribution:  EUR 880.000 

"Management of Change and Human Resources" 

(Study in cooperation with  the main  European steel producers  investigating 
the processes of change that have taken place in the industry and how these 
processes  have  constructively  influenced  dialogue  between  employers  and 
the workforce in the European steel industry) 

Period: 

December 1996 to June 2000 

Total budget: 

> EUR 450.000 

EC contribution:  EUR 300.000 

3.2 

FINANCIAL INTERMEDIARIES (FIS) 

3.2.1 

SODIE France 

SODIE8 France, created in 1983, is a subsidiary of USINOR. At present it is 
owned  55%  by  USINOR9  and  45%  by  a  bank10:  Its  business  is 
redevelopment, i.e. the granting of financial and practical advisory support to 

8 
9 
10 

Société pour le développement de l’industrie et de l’emploi. 
Via SODISID, which is a wholly-owned subsidiary of USINOR. 
Caisse des Dépôts et Consignations, via its subsidiary SCET. 

7 

 
 
  
 
                                                 
mainly  SMEs/start-ups  and  training  and  qualification  support  to  employees 
or  the  unemployed.  Since  1983  SODIE  has  supported  about  8.000 
companies,  and  these  have  created  more  than  100.000  jobs.  In  parallel, 
almost 20.000 employees or unemployed persons have been assisted in their 
mobility and training efforts. 

Today,  SODIE  is  co-operating  in  France  and  Belgium  with  a  number  of 
government authorities at all levels and with companies of all sizes in more 
than 30 employment regions. It has a long list of customers, including cities, 
ministries and major companies such as ALCATEL and IBM. 

3.2.2 

SODIE Belgium 

SODIE Belgium is a recently established subsidiary of SODIE France. It was 
founded  following  the  acquisition  of  75%  of  the  share  capital  of 
COCKERILL-SAMBRE SA by USINOR. Its mission is to create 4.000 new 
jobs in Wallonia. This is to be achieved mainly by supporting SMEs, e.g. by 
granting loans with interest rebates. 

3.2.3  UK Steel Enterprise Limited (UKSE) 

UK  Steel  Enterprise  Limited  (UKSE)  is  a  private  incorporated  company 
specialised  in  redevelopment  support.  It  is  a  wholly-owned  subsidiary  of 
CORUS Group plc and was established in 1975 by the former British Steel 
plc. 

For  over  25  years  it  has  provided  2.400  SMEs  with  over  GBP  50  million 
(EUR 80,6 million) of finance of which GBP 39 million (EUR 62,9 million) 
have been in the form of loans or share capital, with the balance provided in 
other forms. 

Altogether  more  than  3.700  businesses  have  been  directly  assisted  with 
finance or workspace, and in some cases with both. It is estimated that these 
businesses have created more than 60.000 new jobs. In addition, businesses 
assisted by organisations set up by UKSE in the early 1980s are estimated to 
have created at least another 50.000 jobs. 

3.2.4  Venture Capital Dortmund GmbH ("Dortmund Project") 

The Dortmund Project is a public-private partnership financed and run by the 
city  of  Dortmund 
in  cooperation  with  private  companies  such  as 
Thyssen Krupp,  venture  capital  firms,  "business  angels"  and  consulting 
firms. Its aim is the redevelopment of Dortmund and the area from a centre 
of  traditional  heavy  industry  into  a  centre  of  the  New  Economy  (E-
commerce, IT, microsystem technology). 

The  measures  envisaged  and  started  in  2000  include  the  development  of 
existing and new companies by making loans, venture capital, premises and 
highly  skilled  personnel  available  to  them,  inviting  foreign  companies  to 
invest  and  set  up  firms  in  the  region,  improving  the  infrastructure  and 
providing management and logistical support. 

8 

 
 
  
 
Venture  Capital  Dortmund  GmbH  is  a  limited  liability  company  and 
subsidiary  of  Stadtsparkasse  Dortmund,  which  acts  as  one  of  the  banking 
partners of the Dortmund Project. Although only founded relatively recently, 
Venture  Capital  Dortmund  (VCD)  GmbH  can  draw  on  the  experience  of 
Stadtsparkasse Dortmund in the field of SME financing gained during more 
than 30 years of operation. Since the start of its business activities in 2000, 
VCD has invested about EUR 7,7 million in some 10 companies. 

All companies financed by VCD have to correspond to the usual definition of 
SMEs;  particular  attention 
the  field  of  IT, 
telecommunication,  microsystems  technology,  robotics  and  biotechnology. 
The  average  size  of  equity  investments  made  by  VCD  is  between 
EUR 256.000 and EUR 511.000. 

to  SMEs 

is  given 

in 

4. 

IMPLEMENTATION INSTRUMENTS 

4.1 

THE  FIDUCIARY  AND  MANAGEMENT  AGREEMENT  (FMA)  BETWEEN  THE 
EUROPEAN COMMISSION AND EUROFER 

EUROFER  had  full  discretionary  power  to  reject  or  approve  individual 
guarantee  applications.  Each  risk  partially  covered  by  a  EUROFER 
Guarantee  has  to  be  shared  with  the  FI.  EUROFER  reported  to  the 
Commission  all  its  activities  related  to  the  Guarantee  Fund,  including  the 
delivery  of  copies  of  all  relevant  documents  and  of  the  Trust  Account 
statements. 

The availability period for the guarantees lasted nearly two years, ending in 
September 2003. The Commission remunerated EUROFER for the services 
provided under the FMA by paying a flat management fee limited to 5% of 
the funds actually committed. The Guarantee Fund will be wound up at the 
latest by 2012. 

The FMA contains provisions on reporting, auditing, monitoring and control, 
including the right of the Court of Auditors of the European Communities to 
carry  out  its  audits  in  the  premises  of  EUROFER,  the  FIs  as  well  as  in  the 
premises of all final beneficiaries. 

4.2 

THE GUARANTEE AGREEMENTS BETWEEN EUROFER AND THE FINANCIAL 
INTERMEDIARIES (FIS) 

These  agreements  are  framework  agreements  establishing  the  terms  and 
conditions  of  the  partnership  and  cooperation  for  this  project  between 
EUROFER and the FIs. 

Among other things determined in these agreements are the Guarantee Rate, 
the  Guarantee  Cap  and  the  maximum  (loan  or  equity  investment)  portfolio 
partially  covered  by  EUROFER  Guarantees.  The  maximum  size  of  the 
portfolio  partially  covered  by  EUROFER  guarantees  is  approximately 

9 

 
 
  
 
EUR 3.333.000 per FI11. The EUROFER Guarantees are available to the FIs 
free of charges. 

The  Guarantee  Agreement  between  EUROFER  and  each  FI  contains  also 
provisions concerning audit, reporting and control. 

4.3 

THE GUARANTEES (LETTERS OF GUARANTEE) 

In order to receive guarantee cover for loans or equity investments made to 
eligible  SMEs,  the  FIs  had  to  submit  guarantee  applications  to  EUROFER. 
EUROFER  has  issued  the  guarantees  in  its  own  name  but  on  behalf  of  the 
Commission  on  a  trust  basis.  All  projects  for  which  applications  have  been 
submitted  have  been  regularly  reported  to  the  Commission.  All  guarantees 
will expire at the latest seven years after the date of the loan agreement or the 
date  when  the  equity  investment  was  made,  and  in  any  case  not  later  than 
March 2010. 

In order to be eligible for EUROFER guarantees, loans or equity investments 
have to meet the following criteria: 

a) 

The final beneficiary has to be an SME12. 

b) 

The SME has to be established in an EU Member State. 

c) 

The  SME  has  to  be  established  in  a  region  where  industrial 
restructuring is taking place in the coal and steel industries. 

d) 

The SME must demonstrate a certain degree of innovation. 

e) 

f) 

The  financing  which  is  ultimately  covered  by  the  EUROFER 
Guarantee  has  to  be  used  for  a  new  project  or  new  investment. 
Eligibility for any kind of financial rescheduling is explicitly ruled out. 

The  purpose  of  the  financing  which  is  ultimately  covered  by  the 
EUROFER  Guarantee  must  be,  directly  or  indirectly,  to  create  new 
jobs  within  the  period  of  validity  of  the  EUROFER  Guarantee 
concerned. 

g) 

The minimum duration of the loan or equity investment is three years. 

11 

12 

This  amount  is  calculated  on  the  basis  of  the  Guarantee  Cap  of  EUR 500.000  per  FI.  Since  the 
Guarantee  Cap  is  defined  in  the  Guarantee  Agreements  as  15%  of  the  Portfolio,  the  Portfolio  is 
calculated by dividing the amount of EUR 500.000 by 15 (=33.333,33) and multiplying the result 
by 100 (=3.333.333). Because of portfolio peculiarities the Dortmund project cap is defined as 30% 
of  the  maximum  portfolio  of  EUR 1.666.667.  “Guarantee  Cap”  means  the  total  amount  of  the 
EUROFER  payment  obligations  under  EUROFER  Guarantees,  expressed  as  a  percentage  of  the 
Portfolio and as a nominal amount. The amount of EUR 500.000 is obtained by dividing the total 
amount  of  EUR 2.000.000  by  4,  thus  allotting  one  quarter  thereof  to  each  of  the  four  FIs. 
“Portfolio” means the aggregate amount of the principal of the loans or equity investments which 
are made by an FI to SMEs and which are covered by EUROFER Guarantees. 
As defined in annex to Commission Recommendation 96/280/EC (OJ L 107, 30.4.1996, p.4). 

10 

 
 
  
 
                                                 
4.4 

THE TRUST ACCOUNT 

In April 2001 the Commission transferred the first part of the fund concerned 
(EUR 1,5  million)  to  the  EUROFER  Trust  Account  established  for  this 
purpose.  The  remaining  part  of  the  funds  (EUR  500.000)  was  paid  in 
September 2002. The Trust Account is reflected in the books of EUROFER. 
It  is  maintained  in  EUR,  and  is  used  exclusively  for  transactions  in 
connection with the Facility. EUROFER promptly records all transactions in 
respect of the Facility in the Trust Account. 

EUROFER’s auditors have to produce an audited report on the accounts held 
with  respect  to  existing  Guarantees.  DG  ECFIN  establishes  quarterly 
financial  reports  on  the  figures  provided  by  EUROFER.  This  financial 
information is reported to DG BUDGET. 

5. 

PROJECT MONITORING  

The Commission is monitoring EUROFER's fund management activities on 
the  basis  of  a  monitoring  programmes  set  up  in  line  with  the  monitoring 
programmes for already existing comparable funds.  Such  comparable  funds 
include  the  SME  Guarantee  Facility  and  the  Growth  and  Employment 
Initiative or the ETF Start-up Facility, which are both managed by the EIF13. 
In  addition  to  the  examination  of  the  reports  and  Trust  Account  statements 
received  from  EUROFER,  the  Commission  will  carry  out  monitoring 
missions to EUROFER, the FIs and selected final beneficiaries after having 
achieved a certain project maturity. Such visits are scheduled in 2004. 

6. 

RESULTS 

6.1 

USE OF FUNDS 

By 30 September 2003, 136 requests had been received and 127 EUROFER 
Guarantees have been issued in the four countries selected by the EUROFER 
programme.  Only  3  defaults  occurred  to  date.  Nine  guarantees  have  been 
refused as they did not meet the eligibility criteria. 

99,73%  of  the  fund  has  been  used  which  represents  in  total  a  portfolio  of 
EUR 11.635.581.  35  %  of  the  total  portfolio  has  been  used  by  Sodie 
Belgium,  14%  by  S-Venture  Capital  Dortmund  GmbH,  28  %  by  Sodie 
France and 23% by UK Steel Enterprise Ltd. 

The characteristics of financing vary among Financial Intermediaries. As far 
as loans are concerned (for France, UK and Belgium enterprises), the average 
loan term is 5 years. In the UK, enterprises seek shorter term loans (3 years 
mostly),  the  Belgian  enterprises  seek  longer  term  loans  (up  to  7  years  in 
general) whereas French enterprises require in general 5 years loans. As for 
the five German enterprises, their type of financing was Equity Investment. 

13 

see point 2.2 above; Council Decision 98/347/EC of 19.5.1998, OJ L 155, 29.5.1998, p. 43. 

11 

 
 
  
 
                                                 
It is worth noting that a guarantee facility has usually a good leverage effect 
as  been  especially  demonstrated  by  programmes  like  SME  Guarantee 
Facility14 

6.2 

STRUCTURE OF BENEFICIARIES 

The first results of this pilot project show that there has been more extension 
of already existing activities than creation of business. Thirty-six guarantees 
were  aimed  at  creating  firms  whereas  eighty-eight  were  used  to  develop 
activities.  Sixteen  enterprises  have  been  created  in  Belgium,  fourteen  in 
France, five in the UK and one in Germany. 

The  majority  of  beneficiaries  were  micro  and  small  enterprises.  Only  ten 
beneficiaries were medium enterprises of which five are located in France. 

For three of the member states (France, UK and Belgium) the most important 
activities  are  in  the  fields  of  industrial  production  and  the  service  sector 
whereas in Germany most of the projects belong to the technology sector. 

Industrial  production  covers  a  large  range  of  activities  and  in  particular  the 
steel sector, processing of metals, manufacturing of electrical equipment and 
food processing. 

Nevertheless, sectors of activity vary from one country to another. In the UK, 
Belgium  and  Germany  a  significant  number  of  businesses  are  oriented 
towards  new  technology  whereas  in  France  traditional  metal  manufacturing 
is still an important activity. 

Generally,  the  results  show  that  the  type  of  activity  created  is  still  strongly 
related to the steel industry. The new SMEs have absorbed the work force in 
these  regions  and  used  it  to  develop  new  activities  thanks  to  the  available 
know how. 

Evidently,  the  regions  targeted  by  this  pilot  project,  are  not  regions  which 
attract  hi-tech,  innovative  industries  easily  and  consequently  the  FIs  have 
also taken into account the aspect of job creation. 

6.3 

JOB CREATION 

The  results  of  job  creation  given  by  UK  Steel  Enterprise  Ltd  demonstrated 
that 67 jobs have been created to date in the UK out of the 382 forecasted. 
SODIE  Belgium  reported  the  creation  of  226  new  jobs  which  means  that 
already in this early stage of the project 40% of the foreseen job-creation has 
been achieved. For SODIE France, 150 jobs have been created yet out of the 
625  planned.  As  for  Venture  Capital  Dortmund,  55  jobs  out  of  the  101 
expected  were  created.  Nevertheless  it  should  be  pointed  out  that  a 
significant  number  of  guarantees  have  been  issued  within  the  last  two 

14 

leverage  effect 

The 
for  all 
at 30 September 2003 was 13.5. 

intermediaries  under 

the  SME  Guarantee  Facility  as 

12 

 
 
  
 
                                                 
months,  and  as  a  consequence  it  is  not  yet  possible  to  evaluate  total  job 
creation, which is expected to increase further. 

6.4 

DEFAULTS 

Three  defaults  have  occurred  since  the  implementation  of  the  EUROFER 
programme:  2  business  failures  with  UK  Steel  Enterprise  Ltd  and  1  with 
Sodie France. In the UK the guarantee amount paid out for the two defaults 
was  EUR 197.523  and  in  France  EUR 20.000  giving  a  total  to  date  of 
EUR 217.523  which 
total  portfolio  of 
EUR 11.635.581. 

represents  1,8  %  of 

the 

It has to be stressed that the data on default obviously cannot be considered 
as definitive. 

7. 

EVALUATION 

The  evaluation  of  the  EUROFER  Guarantee  Fund  undertaken  by  all 
programme  partners  (Commission,  EUROFER  and  the  participating  FIs) 
demonstrated  the  successful  implementation  of  this  pilot  project  at  Union, 
national  and  local  level.  The  outsourcing  of  the  fund  management  limits 
considerably the Commissions involvement mainly to monitoring duties thus 
saving  administrative  and  management 
resources.  The  budget  of 
EUR 2 million covered a portfolio of 127 loans with a total loan-amount of 
nearly EUR 12 million. It should however be noted that this pilot project will 
require  the  Commission  and  the  participating  partners  to  follow-up  the 
project related tasks until the last loans have been paid back latest in 2012. 

As  regards  EUROFER  and  the  participating  Financial  Intermediaries  the 
additionally  of  this  pilot  project  has  been  demonstrated  through  the 
expansion  of  available  financing  possibilities.  In  particular  it  has  been 
pointed  out  that  the  ability  to  provide  guarantees  for  new  and  innovative 
projects  has  the  added  advantage  of  supporting  companies  that  could  have 
had  difficulties  finding  alternative  funding.  Also  positively  judged  was  the 
less  bureaucratic,  efficient  procedure  in  order  to  benefit  from  EUROFER-
guarantees. 

It  must  be  noted  again  that  the  innovation  criteria  for  SMEs  to  be  selected 
has not been implemented by the intermediaries in all cases because regional 
characteristics did not permit it and the FIs were also addressing the aspect of 
job creation. 

13 

 
 
  
 
8. 

CONCLUSION 

The  EUROFER  Guarantee  Fund  has  met  the  envisaged  goals  and  can  be 
judged  therefore  as  a  successful  pilot-project.  Facing  ongoing  problems 
related to  the  restructuring of coal  and steel regions in the European Union 
and  the  new  member  states  the  cooperation  with  specialised,  experienced 
partners has shown a positive impact on job-creating projects undertaken by 
SMEs 

The almost 100% usage of the fund proves the strong demand from SMEs for 
financial  support  in  the  chosen  EU  regions  affected  by  the  industrial 
restructuring of the coal and steel sectors.  

However, the question of whether this pilot project should be developed into 
a full programme needs to be addressed. On one hand specific  targeting by 
an  instrument  can  concentrate  funds  on  priority  regions  and  sectors  as  has 
been the case here. On the other hand, the experience of this pilot project has 
shown  that  the  concentration  on  specific  regions  combined  with  the  high-
technology  sector  has  been  too  limited  to  achieve  the  desired  objectives.  It 
has  to  be  pointed  out  that  other  existing  instruments  and  programmes  with 
wider  eligibility  criteria  are  available  in  these  regions  and  sectors.  In 
particular,  the  multiannual  programme  for  enterprise  and  entrepreneurship, 
and in particular for small and medium-sized enterprises 2001-2005 (MAP)15 
is  already  covering  the  above  mentioned  criteria.  Given  the  remarks  of  the 
European  Parliament  in  the  budget  2000,  partial  overlaps  with  existing 
instruments  could  not  be  avoided.  Nevertheless,  the  experienced  and 
specialised  financial  intermediaries  of  this  EUROFER  project  should  be 
considered as suitable financial institutions in the framework of the already 
existing programmes.  

The  Commission  policy  remains  in  favour  of  general  instruments  which 
permit visibility and economies of scale in the monitoring and management 
of programmes. This is why the Commission does not propose to extend this 
pilot programme with a new budget and with new legal basis. 

15 

Council Decision 2000/819/EC of 20.12.2000, OJ L 333/84, 29.12.2000. 

14 

 
 
  
 
                                                 
Annex 

B5-504  Measures to assist the phasing-in in the general budget of the activities 

financed through the ECSC16 

Remark in the Budget 2000 

New article 

European  Parliament resolution of  15 November 1996 on the integration of 
ECSC activities into the budget of the Union (OJ C 362, 1.12.1996, p. 327). 

Resolution  of  the  Council  of  21  June  1999  concerning  the  expiry  of  the 
Treaty  establishing  the  European  Coal  and  Steel  Community  (OJ  C  190, 
7.7.1999, p. 1). 

This appropriation is intended to finance measures to facilitate the transition 
between  the  activities  traditionally  financed  from  the  ECSC  budget  and  the 
programmes existing in the general budget, particularly the Structural Funds 
and research. It is intended, in particular, to support measures for which, on 
account  of  their  specificity,  there  is  as  yet  no  corresponding  item  in 
Community programmes. 

It has the aim of promoting, particularly by means of European Information 
Centres  or  Information  Outlets,  the  establishment  of  innovative  businesses 
(SMEs)  linked  to  the  industrial  conversion  of  the  coal  and  steel  industries 
(business incubators, provision of industrial tools and financing facilities for 
employees  undergoing  retraining),  particularly 
the 
environment and health and safety at work. 

the  fields  of 

in 

It  is  also  intended  to  promote  initiatives,  if  possible  pursued  in  a  bipartite 
context  (involving  employers  and  employees),  in  the  fields  of  information, 
training  and  stimulation  in  businesses,  especially  with  regard  to  the 
adjustment of working times resulting from restructuring. 

In  selecting  the  beneficiaries  of  these  projects,  the  Commission  will  assign 
priority  to  regions  where  industrial  restructuring  is  taking  place  in  the  coal 
and steel industries, including in the applicant countries. 

In 2001, the Commission will submit to Parliament a report on the results of 
its  projects  and  on  the  activities  which  have  received  funding  from  these 
appropriations. 

16 

OJ L40, 14.2.2000, p. 980-981: European Parliament 2000/81/EC, ECSC, Euratom, Final adoption 
of the general budget of the European Union fort he financial year 2000. 

15