European Commission Demands Elan's Bankruptcy

The Commission reportedly sees this as the only way for the company to be able to repay EUR 10m in illegal state aid.

The repayment of the money which Elan received in a 2008 capital injection and which the Commission classified as illegal state aid in September 2012 should have been carried out at the beginning of last year.

The plan to raise the money included an entry of a private investor into Elan, but Dnevnik speculates that the Commission probably decided for the move due to a standstill in privatisation.

The Commission notified Slovenia of its decision last week, according to Dnevnik. But it is unclear how the demand could be fulfilled, as the state is not directly entitled to the money but should get it through state-owned KAD fund and investment firm Triglav Naložbe.

The Commission's spokesperson Ryan Heath confirmed in Brussels today that a letter on Elan had indeed been sent to the Slovenian authorities. He stressed that the issue had been dragging since 2012 and has "gone well beyond what is considered a reasonable time frame".

"If privatisation is not successful, an insolvent company from which incompatible state aid is to be recovered should normally be liquidated and repayment should be made from the proceeds of the liquidation to end the distortion of competition," he explained.

Since Elan has not been privatised yet, the Commission took action accordingly, Heath added.

However, talks with the Slovenian authorities are still ongoing. "We keep an open door, but we are at the end of what we consider a reasonable time frame. We need to see action now, otherwise we are going to have to move to the stage of a liquidation."

Heath meanwhile denied the Commission giving Slovenia 20 days to settle the matter, noting that any deadlines had long been exceeded and that "speed is of the essence" here.

The Finance Ministry, which has notified Elan of the demand, told the STA that since the sale of Elan was not carried out before the envisaged deadline, the Commission wants "detailed explanations regarding the handling of the sale, which the ministry will send to the Commission".

The ministry added that the company is being sold by its owners, which have provided the aid and which have been informed about all questions from the European Commission regarding the sale and repayment of the illegal state aid.

The state-owned PDP fund, the biggest owner of Elan with a 66% stake, meanwhile told the on-line edition of the daily Finance that it is not a party in the proceedings launched by the Commission regarding the illegal state aid to Elan, nor is it entitled to a refund.

Although the Commission's correspondence was not addressed to the company, Elan said it would fight to defend the interests of the company by legal means if need be.

It highlighted that the appeal against the European Commission's ruling on the state aid by both the company and Slovenia was still pending.

Elan also said that it was still hopeful that the company could be sold quickly to a private investor, which would make the issue of the state aid irrelevant.

Several meetings are expected to be held on the topic in the coming days.

Meanwhile, Slovenia's Bank Asset Management Company (BAMC), which has EUR 10m in claims to Elan, said it was unaware of the Commission's demand and was trying to get additional information.

On the basis of the information, BAMC is expected to call a meeting of the creditor board to review all possibilities for the stakeholders.

One option would be for BAMC to transform its claims to Elan in the amount of EUR 10m into capital, but this could again constitute illegal state aid.

Dnevnik further states that the Commission apparently has doubts on whether Elan is capable of surviving on the market in the long run.

According to Dnevnik, the Commission's decision was reportedly made under pressure from lobbyists of Austrian-Swiss company Cameva, one of the two companies interested in purchasing Elan.

Chief supervisor at Elan Aleš Zupančič commented on the Commission's decision by saying that this was a precedent and that Elan would use all legal means available to avoid meeting the Commission's demand.

He said procedures related to the sale of Elan were ongoing and that one Slovenian and one foreign investors were preparing their final bids.

Source: The Slovenia Times

Photo source: The Ski Barn, Tesmasport