December 4, 2020

The Brussels deadlines reduce the margin of maneuver of the Fund for the rescue of strategic companies




He Strategic Companies Rescue Fund authorized by the Government, with an initial endowment of 10,000 million euros and whose operation was approved by the Council of Ministers on July 21, has a date underlined in red on the calendar: June 30, 2021. That day will end the validity of the “Temporary Framework” that makes the state aid regime more flexible, so that if the Commission does not modify it by that date, all aid must have been liquidated. All this, taking into account that many companies will have a more accurate picture of the impact of covid when they close this year or formulate the accounts for this year in March 2021. To the above, it is added that Royal Decree-Law 25/2020, of July 3, provides up to 6 months to process applications.

Market sources consulted by ABC, have ensured that the will of the Management Board is resolve requests “as quickly as possible” although in the event that these exceed 250 million euros it will not be totally in your hands either. In this situation, according to the aforementioned “Temporary Framework”, they must be notified to Brussels and this will further prolong the process. These same sources have added that in the community capital they are aware of the current moment “and they are moving with more speed than in the previous crisis.”

Aimed at companies considered strategic, and whose viability has been affected by Covid-19, it was put into operation on August 9 and to date has received a request for three companies for an amount greater than 500 million euros. While three other companies are in the so-called “Annex 0” or information phase with which to resolve possible doubts prior to a firm request. “There are more companies swarming”, have pointed out market sources who warn against the reputational problems that could lead to explicit recognition that the use of this instrument is being probed.

Two of the three firm applications registered are already public knowledge: the first Hard Felguera that requested financing for an amount of 100 million euros. The other is Air Europa (Globalia) which has put on the table a financing need of 400 million euros, and on whose concession depends the definitive closing of its sale to Iberia (IAG).

With voice and vote in strategic decisions

It is in movements like the previous one, where the Fund will have a lot to say if it is a rescued company. Specifically, the grants granted can range from participative or ordinary loans to convertible bonds into shares to the taking of a direct participation in the capital stock. The latter will generate “political rights” over the company now owned by the Fund, and that by a resolution of August 7 of this year of the Ministry of Finance will remain in the hands of the president of the Management Board, the president of SEPI Bartolomé Lora Toro.

Lora is a good connoisseur of the “guts” of SEPI since he has held the Directorate of Investees in 2002 and that of Investees of Defense in 2012, among other positions. Specifically, the order of August 7 puts in your hands the management of the aforementioned “political rights” and «Prior authorization of strategic decisionss of the beneficiary company that have been established in the Shareholders’ Agreement or the Management Agreement with the Company.

The rest of Management Council It is made up of the heads of the Secretariats of State for the Economy, the Undersecretariat for Finance, the General Secretariat for Industry and the Secretary for Industry. In addition to having a voice and vote, a representative with a minimum rank of general director, from the ministries affected by the matters to be discussed. That is to say, for example, if the company requesting the financing is dedicated to cultural activities, this ministry could intervene in the deliberations.

All of the above will be determined in a management agreement or one of partners, if you enter as a shareholder of the beneficiary company. Market sources, have pointed out in this regard, that it will be “dresses made to order” for each case and that the objective is to remain as little as possible in the shareholding. That is to say, no nationalizations.

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