European Commission launches investigation into Oltchim state aid

19 November 2009 16:43  [Source: ICIS news]

PRAGUE (ICIS news)--The European Commission has launched a state aid investigation into the first phase of Romanian government assistance targeted at reviving chemical company Oltchim, its Competition Commissioner announced on Thursday.

The Commission would decide whether a state guarantee worth €49.6m ($74.0m) — granted to help polyvinyl chloride (PVC) producer Oltchim solve its feedstock difficulties by acquiring petrochemical assets including an ethylene cracker from fellow Romanian company Arpechim — was properly awarded in line with the Commission-approved Temporary Framework for State Aid to an Economy during the financial crisis.

Competition Commissioner Neelie Kroes said: "The Temporary Framework allows companies to overcome financial problems arising from the current credit squeeze. The Commission will verify whether Oltchim's difficulties are linked to the crisis or predate it.

“In the latter case, the Temporary Framework is not the appropriate instrument to address the company's problems. This would not preclude, however, the possibility of granting, for example, rescue and restructuring aid to the company, if the conditions of the Rescue and Restructuring Guidelines were met."

Activist minority shareholder in Oltchim, Germany's Petro Carbo Chem (PCC), said the investigation had been announced following a complaint that it lodged with the Commission against the state guarantee.

This is the second EC investigation into Oltchim to have been opened in recent months. In September, Kroes said the Commission would examine whether a second phase of pledged state assistance, comprising loan guarantees worth €339.2m ($498.8m) and a debt-to-equity swap valued at €135m, complied with EU state aid rules.

Oltchim said it was convinced that both the Commission investigations would find in its favour.

($1 = €0.67)

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By: Will Conroy
+44 20 8652 3214

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