The European Commission has approved, under EU State aid rules, Spanish plans to set up a €1 billion recapitalisation fund that will invest through debt and equity instruments in certain companies affected by the coronavirus outbreak. The scheme was approved under the State aid Temporary Framework.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “This €1 billion recapitalisation scheme will enable Spain to support companies affected by the coronavirus outbreak by facilitating their access to finance in these difficult times. We continue working in close cooperation with Member States to find workable solutions to mitigate the economic impact of the coronavirus outbreak, in line with EU rules.”
The Spanish support measure
Spain notified to the Commission under the Temporary Framework a €1 billion recapitalisation scheme to provide debt and capital support to companies affected by the coronavirus outbreak.
The scheme will be implemented through a recapitalisation fund, which goes under the name “Recapitalisation Fund for companies affected by COVID 19 outbreak”, with a budget of €1 billion. Under the scheme, the aid will take the form of debt and recapitalisation instruments, in particular equity and hybrid capital instruments.
The measure is open to companies established in Spain and active in all sectors except the financial one, with total net yearly revenues of minimum €15 million and up to €400 million on a consolidated basis, and that are now facing capital needs due to the coronavirus outbreak. Companies that have already received support through the “Solvency Fund for Strategic Enterprises” approved by the Commission in July 2020 (SA.57659) are not eligible for aid under this new scheme.
The Commission found that the Spanish measure is in line with the conditions set out in the Temporary Framework. In particular:
With respect to recapitalisation measures, (i) support is available to companies only if no other appropriate solution is available and it is in the common interest to intervene; (ii) support is limited to the amount necessary to ensure the viability of beneficiaries and to restore their capital position to before the coronavirus outbreak; (iii) the scheme provides an adequate remuneration for the State and it incentivises beneficiaries and/or their owners to repay the support as early as possible (including a dividend ban, and a ban on bonus payments to management); (iv) safeguards are in place to ensure that beneficiaries do not unduly benefit from the recapitalisation aid by the State to the detriment of fair competition in the Single Market, such as an acquisition ban to avoid aggressive commercial expansion.
With respect to aid in the form of subordinated debt instruments, where the fund’s interventions exceed the relevant limits on turnover and wage bill of the beneficiaries, the aid will have to fully comply with the additional conditions established for recapitalisation measures, in line with the Temporary Framework.
Finally, only companies that were not considered to be in financial difficulty already on 31 December 2019 are eligible for aid under this scheme.
The Commission concluded that the measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of Spain, in line with Article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU) and the conditions set out in the Temporary Framework.
On this basis, the Commission approved the measure under EU State aid rules.