Financing of Polish Nauta Shipyard in Line with EU Aid Rules

After an in-depth investigation, the European Commission concluded that the acquisition of bonds worth PLN 120 million (around €40 million) of Nauta Shipyard by the State-owned Polish Industrial Development Agency (IDA) was in line with EU state aid rules.

The Commission found that the bonds were acquired on market terms and therefore did not give Nauta an undue economic advantage. As a result, the financing does not constitute state aid in the meaning of EU rules.

In November 2009, IDA acquired 2-year bonds issued by Nauta to finance an investment in new assets. As the investment was not completed on time, IDA agreed to postpone the redemption of the bonds until November 2013. The Commission initially had doubts whether the bonds were acquired on market terms and whether the extension of maturity from 2 to 4 years was economically justified.

The Commission’s investigation found that before making the investment IDA analysed the financial standing of Nauta on the basis of sound assumptions and that this assessment justified the decision to acquire the bonds. The Commission also found that the bonds were acquired by IDA on market terms, given the financial situation of Nauta and the quality of collateral provided. Finally, the extension of maturity was justified by an increase of the interest rate and a higher collateralisation. The Commission therefore concluded that the acquisition of bonds did not give Nauta an undue economic advantage.

As a consequence, the financing does not constitute state aid in the meaning of Article 107 of the Treaty on the Functioning of the European Union (TFEU).

Background

In January 2012, the Commission opened on its own initiative an investigation into potential state aid granted by IDA to Nauta and the Crist Shipyard. The Commission found in July 2012 that no aid was granted to Crist.

Public interventions in companies that carry out economic activities can be considered free of state aid in the meaning of the EU rules when they are made on terms that a private player operating under market conditions would have accepted (the so-called “market economy investor principle” – MEIP). If the MEIP is not respected, the public intervention constitutes state aid in the meaning of the EU rules (Article 107 of the Treaty on the Functioning of the European Union – TFEU), because it procured an economic advantage to the beneficiary that its competitors did not have. The Commission then proceeds to assess whether such aid can be found compatible with the common EU rules that allow certain categories of aid.

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Press Release, March 21, 2013