The Commission has launched an in-depth investigation to establish whether the modification of the restructuring plan of Huta Stalowa Wola (HSW), a Polish industrial machinery company, is compatible with EC Treaty state aid rules. The Commission authorised restructuring aid for HSW in 2006, but HSW modified its restructuring plan without notifying the change to the Commission. The opening of a formal investigation will give interested parties an opportunity to comment. It does not prejudge the outcome of the investigation.
In 2006, the Commission approved €17.3 million restructuring aid to HSW. However, without informing the Commission, HSW modified its restructuring plan before the Decision was taken, due mainly to changing market conditions. The Commission will now investigate whether the modified restructuring plan would enable the company to become profitable in the long-term.
The Commission's investigation will focus on the conversion into equity of two loans that the Polish Industrial Development Agency granted to HSW in 2003 and 2004. This transaction would enable HSW to improve its liquidity and to raise additional funds that are claimed necessary for its restructuring.
In its 2006 decision, the Commission already found that the two loans constituted state aid. The Commission now has concerns that the capital injection from the Industrial Development Agency resulting from the conversion of the loans into equity would bring an additional advantage to HSW. However, aid to companies in difficulty can only be allowed under the conditions of the EU guidelines on aid for rescuing and restructuring. The Commission will assess the justification for the additional need of funds, in order to verify that the aid is limited to the minimum necessary. The Commission will also investigate whether additional compensatory measures would be needed to offset potential distortions of competition resulting from the aid. [11 October 2007]