European Commission approves €400 million Portuguese recapitalisation scheme to support companies affected by the coronavirus pandemic

The European Commission has approved a €400 million Portuguese scheme to support strategic companies affected by the coronavirus pandemic. The scheme was approved under the State aid Temporary Framework and is included in the national Recovery and Resilience Plan.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Companies active in various sectors have seen their revenues significantly decline because of the coronavirus outbreak and the restrictive measures in place. This €400 million Portuguese scheme will enable Portugal to support these companies by helping them meet their liquidity and solvency needs and ensuring the continuity of their activities. We continue to work in close cooperation with Member States to find workable solutions to mitigate the economic impact of the coronavirus pandemic, in line with EU rules”.

The Portuguese support measure

Portugal notified to the Commission under the State aid Temporary Framework a €400 million scheme to support the solvency of viable strategic non-financial companies active in Portugal and affected by the coronavirus pandemic. The budget will be made available through the Recovery and Resilience Facility.

Under the scheme, the aid will take the form of (i) equity instruments (including ordinary and preferred shares), (ii) hybrid instruments (convertible bonds), and (iii) a combination of equity and hybrid instruments. The investment amount per company is in principle limited to €10 million.

Aid will be provided through the Strategic Recapitalisation Programme of the Capitalisation and Resilience Fund (“the Fund”). The Fund is managed by Banco Português de Fomento, S.A., which is the National Promotional Bank.

The purpose of the scheme is to address the liquidity and solvency needs of the beneficiaries and to help them continue their activities during and after the pandemic.

The Commission found that the Portuguese scheme is in line with the conditions set out in the Temporary Framework. In particular, (i) the support will be limited to the amount necessary to ensure the viability of beneficiaries and to restore their capital position to before the coronavirus pandemic; (ii) 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; (iii) 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; and (iv) the aid will be granted no later than 30 June 2022.

The Commission concluded that the measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework.

On this basis, the Commission approved the aid measure under EU State aid rules.