2008/145/EC: Commission Decision of 12 September 2007 on State aid C 54/2006 (ex N 276/2006) planned by Poland for Bison Bial SA (notified under document number C(2007) 4145) (Text with EEA relevance)
Date: 2007-09-12
Institutions: European Commission
Subjects: Poland, State aid, aid for restructuring, application of EU law, control of State aid, machine-tool industry, metalworking

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COMMISSION

COMMISSION DECISION

of 12 September 2007

on State aid C 54/2006 (ex N 276/2006) planned by Poland for Bison Bial SA

(notified under document number C(2007) 4145)

(Only the Polish version is authentic)

(Text with EEA relevance)

(2008/145/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(5)

Having regard to the Treaty
establishing the European
Community, and in particular the first subparagraph of Article
88(2) thereof,

Having regard to the Agreement on the European Economic
Area, and in particular Article 62(1)(a) thereof,

Having called on interested parties to submit their comments (1)
pursuant to the provisions cited above,

Whereas:

(1)

(2)

(3)

1. PROCEDURE

On 4 May 2006 Poland gave notification of planned
restructuring aid for Bison Bial SA (hereinafter ‘BB’).

By letter of 13 June 2006 the Commission asked Poland
to submit some missing information, which was duly
provided by the Polish authorities on 13 July 2006.
The Commission requested further information by letter
of 29 August 2006. The Polish authorities replied by
and
September,
18
letters
3 November 2006.

20 October

dated

laid down in Article 88(2) of

By letter of 20 December 2006 the Commission
it had decided to initiate the
informed Poland that
proceedings
the EC
the measure. The Commission’s
Treaty in respect of
decision to initiate proceedings under Article 88(2) of
the EC Treaty was published in the Official
Journal of
the European Union (2). The Commission invited interested
parties to submit their comments on the measure.

(4)

The Polish authorities submitted their observations by
letter of 23 January 2007. No reactions from third
parties have been received.

On 28 March a meeting was organised with represen-
tatives of the Polish authorities and BB. The Commission
asked for further information by letter of 17 April 2007.
The Polish authorities replied by letter of 15 May 2007.

(6)

(7)

(8)

2. DETAILED DESCRIPTION OF THE AID

2.1. The company

BB is a large company which produces machine tool
fixtures such as lathe chucks, spindle tooling, milling
fixtures and tool holders. It was created in 1948 as a
State enterprise. In 1997 the State sold 53 % of BB’s
shares to the private company Metalexport Sp. z o.o.,
which in 2004 was renamed Mex-Holding Sp. z o.o.
At the end of 2006 the State held 18 % of BB’s shares;
while the remaining shareholders were private investors.
BB had 950 employees in 2006, down from 1 680 in
2000.

In 2004 the company had a 17 % share of the Polish
fixtures market, which represented only
machine tool
20 % of BB’s output,
since the company produces
mainly for export
(in 2004 30 % of output was
exported to the United States, 15 % to Italy, 7 % to
Eastern European countries including Russia and 5 % to
the United Kingdom). The company distributes most of
its exported products through companies from the Mex-
Holding Group, such as Toolmex Corporation (USA),
Mexpol GmbH (Germany), Toolmex Polmach (UK) or
Italmex SA (Italy).

BB’s estimated share of the European market amounts to
1,3 %. The geographical scope of the market for these
products is at least European and possibly worldwide.
Production of standard machine tool
fixtures like the
ones made by BB is characterised by overcapacity at
world and European level.

(1) OJ C 23, 1.2.2007, p. 20.
(2) See footnote 1.

(9)

The company is based in a region eligible for aid under
Article 87(3)(a) of the EC Treaty.

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2.2. Difficulties faced by the company

(10)

BB first experienced difficulties in 2001, with losses
amounting to PLN 24 million. Poland has identified the
following main reasons for these financial difficulties:

have led to significant indebtedness. In 2004 the value
of assets was estimated at PLN 57 million and liabilities
amounted to PLN 115,7 million. In other words, equity
was negative. At end-2006 equity was still negative,
amounting to – PLN 26 million. The analysis submitted
to the Commission shows that without aid, the company
will go bankrupt in the near future, as it will not be able
to reimburse various immediately payable debts.

— appreciation of the Polish zloty against the US dollar
the

for 30 % of

accounts

(the United States
company’s sales);

— the difficult financial situation in the business group
as a whole and non-repayment by the parent
company of a PLN 16 million loan;

(15)

(11)

(12)

(13)

— declining export sales as a result of stagnation in the
United States and Western Europe after September
2001.

arrears.

These circumstances, coupled with the high cost of
borrowing prevailing in the market, caused serious
liquidity problems. The financial difficulties resulted in
debt
In 2002 four banks demanded the
immediate repayment of loans. BB was unable to meet
its existing commitments, including wages, which led to
a four-month plant shutdown. Sales dropped by half
(from PLN 91 million in 2001 to PLN 48 million in
2002) and the year ended with a net loss of PLN 74,8
million.

BB’s difficulties mirrored the deteriorating situation of its
parent company — Mex-Holding Sp. z o.o. In 2002 the
group as a whole generated losses of PLN 75,8 million.
Since then the situation has improved, but the group
continues to record losses and its equity is negative.

In 2003 the company managed to reduce its losses to
PLN 8,5 million, and in 2004 it generated a profit of
PLN 5,1 million. According to the Polish authorities, this
reflected the fact that a start had been made on restruc-
restructuring
turing BB.
measures resulted in increased sales, reduced costs and
partial debt remission. Consequently in 2005 and 2006
the company generated profits amounting to PLN 20
million and PLN 12,5 million respectively.

Implementation of

the first

The restructuring operation

BB has devised a restructuring plan for 2003-2009.
Restructuring focuses mainly on finances, assets and
employment. Financial restructuring, which started in
included repayment of old debts in accordance
2003,
with agreements concluded with private creditors, the
writing-off of part of the private and public debt and
repayment of the remaining public debt using the loan
to be granted by the State-owned Industry Development
Agency (‘the IDA’).

(16)

In 2004 the company signed agreements concerning
repayment of debts to banks and its employees and a
court settlement agreement with other private creditors.

(17) Operational restructuring started in 2001. The company
reduced employment from 1 680 employees in 2000 to
1 144 employees in 2001 and to 925 employees in
the restructuring period the
2005. By the end of
company should have a workforce of 800.
In other
words, by the end of restructuring employment will
have been reduced by 52 % in relation to 2000 or by
30 % in relation to 2001.

(18) As

to sell

regards asset

restructuring, BB plans

its
redundant assets, move and sell the land on which it is
currently located. According to the evaluation submitted,
the market value of the land is PLN […] (3) million.
Originally the Polish authorities indicated that the land
should be sold in 2009, as first all the machines and
equipment had to be transferred to the new site.
In
addition, the real estate for sale is encumbered with a
mortgage. Following the Commission decision to initiate
the formal investigation procedure, Poland indicated that
the sale might be delayed until 2010.

(14) Despite generating profits, however, BB is still struggling.
Accumulated losses on operating activities since 2001

(3) Confidential information.

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(19)

(20)

are mainly

Between 2003 and 2005 BB invested PLN 1,4 million,
and the investments planned for 2006-2009 amount to
PLN 14,2 million. These
replacement
investments, i.e. purchase of more efficient and environ-
mentally friendly machines and equipment. The plan
postpones any significant increase in investments until
the scarce financial resources
after 2009 in view of
available. The bulk of
investments will be made in
2010 and will be linked to the company’s planned
move to a new site.

the reduction in the
Poland initially suggested that
jobs and the company’s production area
number of
should be regarded as sufficient to mitigate the adverse
effects of the aid. However, Poland also confirmed that
these reductions would be counterbalanced by the
planned investments
in more productive equipment,
with the result that BB’s production capacity would be
unchanged. Poland stated that maintaining capacity at
current levels (instead of increasing it) should in itself
be regarded as a compensatory measure.

(24)

(25)

(21)

The notified restructuring plan assumed that restruc-
turing costs for 2003-2009 would amount to PLN 138
million, the main item being financial restructuring costs
of PLN 122,6 million. The remaining PLN 15,6 million
are investment costs.

(22)

The plan assumes that financial restructuring will consist
of repayment of debts to banks of PLN 65,6 million on
the basis of composition agreements, repayment of other
private debts of PLN 17,5 million and repayment of
public debt of PLN 39,5 million. The full amount of
the planned state aid will be earmarked for the settlement
of public debt. Part of the restructuring costs will be
financed by the revenue acquired from the sale of
assets after the company moves to its new site.

The aid measures

(23)

legislation:

State aid for the restructuring of BB is based on two
the Restructuring of Businesses’
pieces of
Public Debt Act of 30 August 2002 (‘the Act of
30 August 2002’) and the State Aid to Enterprises of
Special Significance
to the Labour Market Act of
30 October 2002 (‘the Act of 30 October 2002’), as
amended by the Act of 14 November 2003.

The Act of 30 August 2002 incorporated into the Polish
system the possibility for companies in financial diffi-
culties to restructure public debt by way of write-offs.
The company concerned had to file an application
together with a restructuring plan to each public
authority whose claims were to be restructured (here-
inafter ‘restructuring authority’). Having concluded that
the proposed restructuring plan could improve the
company’s
restructuring
authority issued a decision on restructuring conditions
which listed the debts covered by restructuring. If the
company fulfilled all
the conditions imposed by the
decision, the restructuring authority was legally obliged
to issue a decision to write off the debts listed in the
decision on restructuring conditions.

situation,

financial

the

The Act of 30 October 2002 subsequently centralised
this system and empowered the President of the IDA
to issue an equivalent of the above-mentioned decision
on restructuring conditions, referred to as a restructuring
decision (Article 10(1)(4),
read in conjunction with
Article 19). The restructuring decision contains an
assessment of the restructuring plan and indicates how
referred to in the plan should be
the public debt
restructured. The restructuring authorities in question
are then obliged by law to issue individual decisions to
write off
listed in the restructuring
decision.

the public debt

(26)

Lastly, the Act of 14 November 2003 amending the Act
of 30 October 2002 made the public debt restructuring
conditional on the transfer of assets corresponding to at
least 25 % of the total amount of debt to be restructured
to a third company, the Operator (a company wholly
owned by the IDA or the Treasury). The proceeds from
the sale of these assets by the Operator were to cover at
least part of the public debt concerned, the remainder
being written off on completion of restructuring.

(27)

BB applied for public debt restructuring pursuant to the
Acts of 30 August 2002 and 30 October 2002. The
overall nominal value of the planned state aid is PLN
31,43 million (4)
(EUR 8,2 million). These measures
loan and write-offs of public
comprise a preferential
debt. A detailed description of the state aid measures is
set out in the following table.

(4) The Polish authorities suggested that in order to calculate the aid
element of the measure, the value of assets that would be transferred
to the Operator
in exchange for debt cancellation should be
deducted from the nominal value of aid. Basically, the transfer of
these assets represents the company’s contribution to restructuring
and it has no impact on the value of the aid measure. Therefore in
this case the aid element is equal to the nominal amount of aid.

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Table 2

Planned state aid

No

Awarding authority

Type of aid

Nominal amount of aid

Aid under the Act of 30 August 2002

(PLN)

1.

2.

3.

4.

5.

ZUS, Bialystok

ZUS, Bielsk Podlaski

ZUS, Zambrów

Mayor of Bialystok

Write-off

Write-off

Write-off

Write-off

933 474,51

113 884,66

144 934,88

1 448 108,90

State Fund for
Disabled (PFRON)

the Rehabilitation of

the

Write-off

519 591,35

6.

Tax Office II, Bialystok

Write-off

217 590,00

Total aid under the Act of 30 August 2002

Aid under the Act of 30 October 2002

3 377 584,30
(with interest as of
31 December 2005:
6 171 774,74)

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

ZUS, Bialystok

Mayor of Bialystok

Write-off

Write-off

3 019 362,90

1 505 534,12

State Fund for
Disabled (PFRON)

the Rehabilitation of

the

Write-off

539 650,70

Tax Office, Bialystok

Bialystok Voivodship Office

Grajewo District

Kolno District

Mayor of Kolno

ZUS, Zambrów

ZUS, Bialystok

Write-off

Write-off

Write-off

Write-off

Write-off

Write-off

Write-off

Total write-offs under the Act of 30 October 2002

71 516,60

25 064,81

12 133,80

17 224,60

248 648,09

626 625,15

398 029,30

6 463 790,07
(with interest as of
31 December 2005:
9 259 229,92)

17.

Industrial Development Agency

Preferential loan

16 000 000

Total

31 431 004,66

3. DECISION TO INITIATE PROCEEDINGS UNDER
ARTICLE 88(2) OF THE EC TREATY

(28)

The Commission decided to initiate the formal
investi-
gation procedure because it had doubts as to whether the
restructuring aid was compatible with the common
market.

(29)

First, the Commission doubted that the restructuring plan
would restore the company’s long-term viability. The

the profits

improvements within the company.

recorded in
Commission suspected that
2004 and 2005 had been due to one-off
items (e.g.
debt waivers) and, as such, were not an indication of
real
In addition,
the plan focused on settling old debts and the investment
for which it made provision would not be sufficient to
guarantee competitive means of production at the end of
the restructuring period.

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(30)

(31)

Second, the Commission had doubts as to the validity of
the proposed compensatory measures. The company
planned to reduce the surface area of
the plant, but
that would not have
reduced production capacity.
Employment had been already significantly reduced, but
this seemed to have been necessary for viability reasons.

Lastly, it seemed that not all the measures indicated by
the Polish authorities as the company’s own contribution
could be regarded as such within the meaning of the
Guidelines. Therefore it was not clear whether the real
own contribution would be large enough,
i.e. whether
the aid was limited to the minimum necessary.

4. COMMENTS FROM POLAND

(32)

Following the Commission decision to initiate the formal
investigation procedure with regard to the planned aid
for BB, the Polish authorities submitted detailed infor-
mation on the company’s strategy.

(33)

the company’s
The Polish authorities explained that
production in Bialystok was located on two sites, one
of which was in Bialystok city centre (site at ulica
[…]). BB plans to sell this real estate and either move
production to its second site or buy a third site, transfer
all production there and sell both sites it owns at present.
According to the forecasts submitted, BB plans to invest
PLN […] million in 2010, once the site on ulica […] has
been sold. If the company decides to sell both sites and
move to a new location the amount of the investments
will be even higher.

(37)

(34)

The Polish authorities have confirmed that basically the
company will be modernised in 2010, after it moves.
Between 2010 and 2014 BB plans to invest PLN 43
million, PLN […] million of which should be realised
by end-2010, the scheduled date of the move.

which will
tation of the company’s long-term strategy.

take place thereafter constitute implemen-

(36) With a view to avoiding undue distortion of competition,
the Polish authorities and the company have proposed
three
compensatory
measures to be implemented by the company:

alternative options

as possible

(a) capping production by reducing the number of BB’s
products by 5 % in comparison with its projected
future production, or

(b) reducing capacity by selling 5 % of BB’s machine

tools, or

(c) reducing capacity by selling BB’s production division
in […] which, in 2006, accounted for 13 % of BB’s
turnover and generated a PLN 1,2 million profit.

the production division in […]

The third option, i.e. selling off the production division
in […], would lead to a 46 % reduction in BB’s product
range and a 12 % decrease in the number of machine
tools. However,
is
partially burdened with debt, the restructuring of which
is supposed to be financed by the notified state aid.
Moreover, […]’s assets are mortgaged or constitute se-
curities
commercial debts.
Therefore the Polish authorities claim that the problem
of […]’s indebtedness needs to be resolved first and that
the division cannot be sold until 2009 at the earliest. BB
to
has undertaken to take all
complete the sale by end-2009 if
the Commission
decides that this would be an appropriate compensatory
measure.

repayment of BB’s

the necessary steps

for

(35)

indicate that

The Polish authorities
the investments
planned for 2010-2014 are designed to modernise the
design and production management system, automate
improve
the assembling process for standard fixtures,
the
technological
production processes and the thermal and chemical
treatment of products and improve measurement and
control methods. The Polish authorities have
also
confirmed that the change of site and the investments

products,

optimise

quality

of

(38) As regards the financing of the restructuring process, the
Polish authorities have indicated that, taking into account
the recent increase in real-estate prices in the region and
the location of the plot to be sold (Bialystok city centre),
the expected revenue from the sale is PLN […] million.
Estimated revenue from the sale of the […] production
division is PLN […] million. Lastly, in accordance with
the legal basis underpinning the planned state aid
scheme, BB is obliged to transfer assets worth PLN
2,795 million to the public body (the Operator)
in
exchange for cancellation of the debt.

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5. ASSESSMENT OF THE AID

5.1. State aid within the meaning of Article 87(1) of
the EC Treaty

(39) Under Article 87(1) of the EC Treaty, any aid granted by
a Member State or through State resources in any form
whatsoever which distorts or threatens to distort compe-
tition
the
certain
production of certain goods and affects trade between
Member States is incompatible with the common market.

undertakings

favouring

by

or

(40)

(41)

(42)

including
The planned cancellation of public debt,
accrued interest, and the loan from the state-owned
agency both involve state resources. These solutions
also confer an advantage on the company by reducing
its costs. As regards the second measure, given that BB is
a company in difficulty whose liabilities far exceed its
assets,
type of
it would not have obtained this
financing on the market. The
aid element may
therefore be regarded as the full amount of the loan.

The previous
restructuring decisions promising the
cancellation of public debt and suspending enforcement
of debt repayments may also constitute aid. However, the
Commission takes the view that,
in this case, the aid
element of these ‘deferments’ is reflected in the notified
aid, i.e. in the interest accrued over the whole period and
added to the total amount of the debt to be cancelled.

The metal tools fixtures produced by BB are sold on the
EU market. BB also competes with other European
producers on third markets. Thus the stronger position
which BB enjoys as a result of the state aid may impact
on the competition in Europe, which means that the
criterion of distortion of trade within the Community
is fulfilled.

(43)

Therefore the above-mentioned measures are regarded as
constituting state aid within the meaning of Article 87(1)
of the EC Treaty.

5.2. Derogations under Article 87(2) and 87(3) of
the EC Treaty

(48)

(44)

The exemptions provided for in Article 87(2) of the EC
Treaty do not apply in this case. As regards exemptions
under Article 87(3), given that the primary objective of
the aid is to restore the long-term viability of a firm in
difficulty, only the exemption set out in Article 87(3)(c),
which authorises state aid to promote the development
of certain economic activities where such aid does not
adversely affect trading conditions to an extent contrary
to the common interest, can be applied. Therefore, the

aid can be considered compatible on the basis of Article
87(3)(c) of the EC Treaty only if the conditions laid down
in the Community Guidelines on State aid for rescuing
(hereinafter ‘the
and restructuring firms in difficulty (5)
Guidelines’) are respected.

5.3. Eligibility of the company

(45) According to the Guidelines, a firm is in difficulty if it is
unable to recover by using its own resources, by raising
the funds it needs from shareholders or by borrowing
it will
and if, without intervention by the authorities,
almost certainly go out of business. The Guidelines also
list some of these companies’ typical characteristics, such
as mounting debt or falling/zero net asset value. Under
point 13 of the Guidelines a firm belonging to a larger
business group is not normally eligible for restructuring
aid, except where it can be demonstrated that the firm’s
difficulties are intrinsic and are not
the result of an
arbitrary allocation of costs within the group, and that
the difficulties are too serious to be dealt with by the
group itself.

(46)

(47)

BB should be regarded as a ‘firm in difficulty’ within the
meaning of the Guidelines.
Its equity is negative. The
company is repaying old debts to private creditors in
accordance with signed agreements (the last instalments
are to be paid in 2009). If the company does not settle
its public debt (through repayment or cancellation),
it
will be payable immediately. Enforcement of this debt
will make repayment of instalments to private creditors
impossible and in all probability the company will go
bankrupt. BB cannot borrow funds on the market to
repay this public debt as its financial situation is very
weak and all its assets have already been pledged.

The existence of profits does not change this assessment
of the company’s eligibility because BB’s equity remains
negative. It should also be borne in mind that it was
possible to generate profits only because the public
authorities
the
planned debt cancellation.

suspended enforcement

in view of

BB’s parent company is also in difficulty, making losses
and accumulating debt, and so it is unable to resolve BB’s
problems. The parent company’s difficulties started soon
after 2000. The parent company’s failure to repay a loan
granted by BB, which is one of the reasons for BB’s
difficulties, reflects the real financial difficulties faced by
the parent company. This was not an attempt to increase
the profits of part of the group or a deliberate aggra-
vation of BB’s difficulties.

(5) OJ C 244, 1.10.2004, p. 2.

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5.4. Restoration of viability

(49)

In the decision to initiate the formal
investigation
procedure, the Commission expressed doubts about the
restructuring operation, pointing out that it was essen-
in scope and failed to take sufficient
tially financial
account of
the
investigation procedure,
decision to initiate the formal
the Polish authorities provided further
information,
thereby allaying the Commission’s doubts as regards
restoration of viability.

restructuring.

Following

industrial

market with significant competition from Asia and in
which margins are squeezed.

(55) On the basis of

these

elements,

the Commission
concludes that implementation of the restructuring plan
will restore the company’s viability provided that restruc-
turing includes
investments
implementation of
planned for 2010 and the restructuring period is
extended until end-2010.

the

(50) A detailed analysis of BB’s accounts points to a real
improvement in the company’s operations since 2004-
2005. Incidental events have made only a limited contri-
bution to this improvement. Incidental events, e.g. debt
cancellations, had an additional positive impact on the
company’s results, but the main source of BB’s profits
derives from its operational activities.

5.5. Avoidance of undue distortion of competition

(56)

Following the Commission’s decision pursuant to Article
88(2) of the EC Treaty, the Polish authorities proposed
three alternative compensatory measures that could be
implemented by BB.

(51)

(52)

(53)

(54)

The product restructuring analysis demonstrates that the
company is
increasingly focusing on products with
higher added value (in 2001 BB produced 709 000
items with a turnover of PLN 84,9 million, while in
2006 it produced 377 000 items with a turnover of
PLN 93,8 million).

(57) As for the first proposal,

i.e. a 5 % reduction of the
number of items produced, the Commission notes that
BB is naturally evolving towards a smaller product range,
but with a higher
the
Commission takes the view that this measure may have
no impact on the company’s behaviour in practice, and
hence will not ensure that BB’s market presence is
reduced.

added value. Accordingly,

The planned investments for 2003-2009 amount to PLN
14,75 million. In fact the company plans to implement a
programme of additional major investments in 2010
worth PLN […] million which is connected with the
plant’s planned move
In the
Commission’s view, only by implementing the second
part of the investment programme will the company’s
long-term viability be restored.

to a new location.

(58)

The second option envisaged the sale of 5 % of
the
company’s machines. Taking into account the fact that
to implement a significant modernisation
BB plans
programme which includes the purchase of new, more
efficient machines, the Commission does not regard this
option as a valid compensatory measure, given that the
production capacity of the sold machines could be offset
by the higher capacity of the new equipment.

For this reason, and taking into account that the real-
estate sale necessary to finance the investments is to be
delayed until 2010, the Commission is of the opinion
that the restructuring period should be prolonged until
end-2010 and that
the investments planned by the
company for 2010 should form part of the restructuring
investments between 2003 and
measures. As a result,
2010 would amount to PLN […] (PLN 14,75 million +
PLN […] million), significantly more than the originally
planned amount of PLN 15,6 million.

The Commission notes that the return on equity of BB
cannot be calculated at present
since its equity is
negative. By 2010 the company’s equity will have been
gradually reconstituted. The figures for 2011 can serve as
the long-term value. That year, return on equity will be
9 % (net profit of PLN 4 million on own capital of PLN
44 million). While not very high, this level appears to be
justified in the light of the fact that BB operates in a

(59)

In the light of the above, the Commission takes the view
that these two options do not ensure that the adverse
effects of the aid on competition are limited.

(60)

such,

two proposals, plus

The third option consists in the sale of the company’s
production division in […]. This sale would reduce BB’s
its turnover by 13 % and the
product range by 46 %,
number of machine tools by 12 %. As
this
option incorporates the solutions provided for in the
first
In
addition, once the […] production division is put up
for sale, the company’s potential competitors will have
an opportunity to acquire an organised part of BB’s capa-
cities, which could mitigate the negative effects of the aid.
Lastly,
viable,
generating profits of PLN 1,2 million in 2006, and as
such it
restructuring
purposes.

the production division in […]

is not necessary to sell

additional

elements.

for

is

it

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(61)

In the light of the above, the Commission takes the view
that the sale of the division in […] constitutes a valid and
sufficient compensatory measure.

(63) However, following extension of the restructuring period
until 2010 with a view to including the investments to
take place that year, these investments must be included
in the list of restructuring costs.

5.6. Aid limited to the minimum

(64)

(62)

that

could be

In paragraph 45 of the decision to initiate proceedings,
the planned
the Commission expressed doubts
repayment of certain debts during the restructuring
period (6)
incorporated into restructuring
costs. These doubts have not been allayed. The
Commission notes that these funds were borrowed as
company’s
part of
the normal
operations, and that
they can be repaid with the
company’s existing resources.

financing of

the

In paragraphs 46 and 47 of
the decision to initiate
proceedings, the Commission raised doubts that certain
measures notified by Poland could be considered as a
beneficiary’s contribution pursuant to paragraph 43 and
44 of
the Guidelines. These doubts have not been
allayed. Therefore these measures will not be regarded
as a beneficiary’s contribution in the following analysis.

(65) As a result, the list of restructuring costs, the beneficiary’s

contribution and state aid is as follows:

2003-2009

2010

2003-2010

(PLN thousand)

Restructuring costs

Public debt restructuring

Investments

31 431

14 754

Total

46 185

Own contribution

Sale of assets (site at ulica […])

Transfer of assets

Sale of production division in […]

Total

State aid

2 795

[…]

[…]

31 431

[…]

[…]

[…]

[…]

31 431

[…]

[…]

[…]

2 795

[…]

[…]

31 431

Own contribution/restructuring costs: 50,4 %

(66)

BB’s own contribution to total restructuring costs is
to 50,4 %, which is in line with
therefore equivalent
the rescue and restructuring aid Guidelines.

(67)

‘To limit

the Guidelines states:

Paragraph 45 of
the
distortive effect, the amount of the aid or the form in
which it is granted must be such as to avoid providing
cash.’ The Commission
the
observes that the firm is once again making a profit.
the
However,

company with surplus

threatened because of

its viability is

amount of its immediately payable debts. The fact that
half of the aid was granted in the form of a loan helps to
ensure that the aid is limited to the minimum necessary.
This is because the loan provides BB with immediate
resources for repayment of
the same
time, BB will have to repay this loan in the future.
This will be possible thanks to regular profits and will
ensure that the firm does not accumulate surplus cash
within the meaning of the Guidelines.

its arrears. At

(6) See Table 1 of the decision to initiate proceedings.

(68)

The Commission therefore takes the view that the aid is
limited to the minimum necessary.

21.2.2008

EN

Official Journal of the European Union

L 46/49

6. CONCLUSIONS

(69)

The Commission concludes that the notified state aid in
favour of Bison Bial can be declared compatible with the
common market provided that the imposed conditions
are met,

The production division in […] shall be sold by end-2009
4.
to a buyer independent of BB. The Polish authorities shall
ensure that, prior to the sale,
the
production division in […] is properly run, that it is provided
with the means to enable its normal development and that no
measures are taken by the beneficiary that would intentionally
diminish its value, e.g.
staff,
intangible assets,
transfer of
customers or sales capacity to other parts of Bison Bial.

the business activity of

HAS ADOPTED THIS DECISION:

Article 1

The aid measures to the amount of PLN 31,43 million notified
by Poland for Bison Bial are compatible with the common
market, subject to the obligations and conditions set out in
Article 2.

Article 3

The Polish authorities shall submit half-yearly progress reports
on the restructuring process.

Article 2

This Decision is addressed to the Republic of Poland.

Article 4

The restructuring period shall be extended until end-2010

1.
and the restructuring plan shall be implemented in full.

2.

The site at ulica […] shall be sold by end-2010.

Done at Brussels, 12 September 2007.

3.
Investments of at least PLN 41,61 million shall be imple-
mented by the end of the restructuring period, i.e. end-2010.

For the Commission

Neelie KROES
Member of the Commission