Jego Ekscelencja Pan Radosław SIKORSKI Minister Spraw Zagranicznych Al. J. Ch. Szucha 23 00-580 Warszawa POLSKA Commission européenne, B-1049 Bruxelles – Belgique Europese Commissie, B-1049 Brussel – België Telefon: 00-32-(0)2-299.11.11.

EUROPEAN COMMISSION

Brussels, 12.06.2012

C(2012) 3736 final

COMP Operations

In the published version of this decision, some information has been omitted, pursuant to articles 24 and 25 of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 of the EC Treaty, concerning non-disclosure of information covered by professional secrecy. The omissions are shown thus […].

PUBLIC VERSION

WORKING LANGUAGE

This document is made available for information purposes only.

Subject: State aid SA.33150 - Poland

Restructuring aid to "BZPG STOMIL" S.A. Sir,

1. PROCEDURE

(1) On 8 June 2011 Poland notified restructuring aid to Bydgoskie Zakłady Przemysłu Gumowego "STOMIL" S.A. (hereinafter: "BZPG Stomil" or "the company"). The Commission has requested additional information by letters dated: 8 August 2011, 18 November 2011 and 9 March 2012. Poland provided replies by letters dated: 21 September 2011, 12 December 2011 supplemented on 12 January 2012, 6 April 2012 and 10 May 2012.

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2. DESCRIPTION

2.1 The beneficiary

(2) BZPG Stomil, the future beneficiary of the restructuring aid, specializes in the production of rubber products, which include in particular high-pressure hydraulic hoses, industrial hoses, hydraulic conduits, rubber sheets and mattings, conveyor and transmission belts, extruded seals. The company is fully owned by the Polish Minister of Treasury and is located in the Kuyavian-Pomeranian Voivodeship, a Polish region eligible for regional aid under Article 107 (3) (a) TFEU.

(3) According to the restructuring plan provided by the Polish authorities the company employed 437 people on 31 July 2010 and the turnover at the end of 2010 was PLN 56 034 388 (ca. EUR 14 million)1.

(4) Poland considers BZPG Stomil to be in difficulty in the meaning of article 11 of the Rescue and Restructuring Guidelines2 (hereinafter "the Guidelines"). Table 1 below presents the main financial indicators of the company for the period 2007 – 2010.

Table 1. Financial situation of the company in 2007 – 2010

2007 2008 2009 2010

Turnover 71 102 295 PLN 56 791 360 PLN 45 192 121 PLN 56 034 388 PLN

Net financial result

51 858 PLN - 3 388 820 PLN - 3 911 570 PLN - 1 543 262 PLN

Liabilities 14 922 108 PLN 9 731 290 PLN 11 017 708 PLN 16 429 500 PLN

Interest charges

84 771 PLN 43 941PLN 33 273 PLN 43 294 PLN

Equity 34 471 112 PLN 29 193 492 PLN 25 480 678 PLN 23 242 519 PLN

EBITDA 396 059 PLN - 3 196 131 PLN - 4 406 984 PLN - 2 006 608 PLN

Total asset value

49 393 221 PLN 38 924 782 PLN 36 498 386 PLN 39 672 020PLN

(5) According to the Polish authorities, the aforementioned figures prove that most of the criteria set out in point 11 of the Guidelines are met. Over the 4 years the company's turnover decreased from PLN 71,1 million to PLN 56 million, while the liabilities increased by ca. PLN 1,5 million by the end of 2010. The total asset value of the company fell considerably reaching the value of PLN 39,6 million in 2010 out of the initial PLN 49,3 million in 2007. Also, the company's equity has been gradually falling since 2007, dropping by over PLN 11 million at the end of 2010.

1 EUR 1 = ca. PLN 4. 2 Community Guidelines on State Aid for Rescuing and Restructuring Firms in Difficulty, OJ 2004/C 244/02.

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2.2 The aid measure

(6) The total restructuring cost amounts to PLN 9 448 570 (ca. EUR 2,3 million). It will be co-financed by restructuring aid in the amount of PLN 3 million (ca. EUR 0,75 million) which was not granted at this stage. The Polish authorities confirmed the fact that they will not grant the aid before the Commission has adopted a decision not to raise objections to the relevant aid.

(7) This aid measure takes the form of a direct grant of PLN 3 million (ca. EUR 0.75 million) made by the Minister of Treasury on the basis of the provisions set out in the Ordinance of the Minister of Treasury of 6 April 2007 concerning the rules governing restructuring and rescue aid for entrepreneurs (Journal of Laws Nr 80, pos. 543).

2.3 Restructuring plan

(8) In the restructuring plan the Polish authorities provided the following reasons for the company's difficult financial situation:

− failure to adjust to market changes and to new conditions of competition, especially because of an absence of the company's own organised commercial network, adapted to the changing demand structure, and a lack of investments reflecting the changes taking place in the market,

− lack of basic measures with regard to the reconstruction and further development of the company’s production capacities, primarily caused by the failure to mobilise resources, for example by selling redundant assets, and the absence of investment programmes and decisions concerning the company’s indebtedness,

− failure to develop and modernise the company's employment structure, particularly through the adoption of an effective incentive system and the absence of a policy of workforce reduction that would go in line with the current situation on the market,

− repeated failed attempts of privatizing the company, which paralysed the company's investment and modernisation process, as it seemed unreasonable to introduce any changes before a new owner would be known,

− diluted brand image and the absence of a uniform, consistent brand image for different ranges of products constitute Company weaknesses,

− obsolete stock of machines and other redundant out-dated assets have a negative impact on the financial result.

(9) The notified restructuring of BZPG Stomil covers the period of 2010 – 2015 and should, according to the Polish authorities, enable the company to return to long term viability. The company plans to achieve profitability by the end of the restructuring period. This should be achieved by implementing the measures listed below under points (i) to (iv).

(i) Organizational restructuring

(10) The following restructuring actions are planned as regards the organization of the company:

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− reorganization and restructuring of the production process in the different plants and departments of the enterprise, concentration of manufacturing rubber production in Bydgoszcz and transfer of production of moulding goods to the Łabiszyn plant,

− changes in the workforce structure and implementation of incentive systems,

− concentration of the company’s activities on the production of the most profitable products, i.e. […], and the concomitant cutting back on the production of other groups of products,

− changes in the company's sales and distribution strategy.

(11) The restructuring will consist of concentrating the production of Plant […] in one production hall and transferring part of what this plant was manufacturing to-date ([…]) to the […] Plant ([…]). As a result, fixed costs in the above-mentioned plants will be reduced and their profitability increased.

(12) The company plans to introduce an incentive system that would be a tool for increasing the efficiency of workers. This has a bearing on the company’s results. This will be followed by an introduction of bonus systems for individual professional groups in the Company: the commercial division, the production division and the support staff. These systems would provide for the payment of bonuses on the basis of implementation of plans (sales plans, production plans), as well as on the basis of performance of individually assigned tasks.

(13) The company wants to adapt the number of workers to production tasks for 2011-15. A decrease in the number of administrative employees is envisaged.

(14) The company plans to introduce a new brand of […] called "[…]" in order to better compete with products offered by foreign competitors from the Far East, which are frequently used in service centres, mainly for the agricultural sector. Also, the new branding of the product group of […] will make it possible to better identify the company’s products on foreign markets.

(15) BZPG Stomil intends to introduce more active sales of […] on the Original Equipment Manufacturers market. There are several hundreds of manufacturers of machines and equipment using […] in their production processes. Many of these companies have entries in their operation and maintenance manuals indicating […] manufactured by BZPG Stomil as the preferred component for the production of such equipment or machinery. This fact is to be used as a development basis for increasing sales of […].

(16) The company wants to develop a sales network for […] through a project called "[…]". In order to increase sales of the company’s products, cooperation agreements will be signed with companies which will provide fitting services for […] and further resale of BZPG Stomil […].

(17) BZPG Stomil envisages taking special measures to increase its market share in the […] market which is strategic for the company.

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(18) Also, in order to increase the company’s share in the hydraulic and industrial hoses market, all its production and marketing activities will concentrate on supporting the sales of these groups of products. The main marketing objective of the company is an increase of sales of its hydraulic hoses range.

(19) Currently the company has only a small share of foreign markets, where its products are sold. It therefore plans to increase its market presence both on the Western and Western European markets.

(ii) Assets restructuring

(20) The following restructuring actions are envisaged as regards the assets:

− sale of some of the company's redundant real estate, machinery and equipment and − renting some of the company' real estate as a result of the organizational changes in

the production process.

(21) The sale of real estate is necessary to quickly obtain essential restructuring funds. The properties for sale comprise: an undeveloped plot of land, an office building, a garage and a utility building. The sale of these properties is justified by the possibility of relocating office work to other premises belonging to the company.

(22) The beneficiary intends to buy new machinery and equipment for the production process. The main reason for this purchase is to allow the company to meet the current technological standards and to raise its competitiveness. The new machines will also make it possible to decrease the costs of production, energy and labour and will thus enable the company to work more efficiently.

(23) The aforementioned organizational restructuring measure will allow the emptying of some of the production and storage room, which will then be available for rental.

(iii) Return to viability

(24) In addition to the restructuring measures the Polish authorities provided a market analysis showing that the markets for hydraulic hoses, industrial hoses and hydraulic conduits are estimated to grow by ca. 5% annually in the next 4 years.

(25) The Polish authorities provided the Commission with the projected financial results under different scenarios (pessimistic, optimistic and base-case scenario). Table 2 below presents the projected financial results for the company under the base-case scenario.

Table 2. Projected results of the company (in thousand PLN)

2012 2013 2014 2015 Net sales and sales equivalents, including: […] […] […] […]

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Profit on sales […] […] […] […] Net profit (after tax /tax credit) […] […] […] […]

(iv) Compensatory measures

(26) There are four compensatory measures proposed by the Polish authorities. Two measures consist of the sale of assets which will reduce the production capacities of the company. Two other measures consist of commitments taken by the company/Polish authorities of abandoning the profitable production and commercialization of certain products, causing a loss of revenues:

1. a reduction of production capacity in plant […] by [25 – 50] % by the sale of a mixer,

2. a reduction of braiding production capacity in plant […] by [5 - 30] % by the sale of 4 braiding lines,

3. a discontinuation of the production and sale of rubber soling sheets as of 2013, 4. a discontinuation of the production of rubber conveyor belts as from the second

half of 2012. First compensatory measure

(27) Plant […] produces a rubber compound, an intermediate product which is used to produce

final rubber products such as hoses, rubber sheets, mattings and technical products. Its production capacity is actually of [15 000 – 30 000] tons per year. In the plant there are […] rubber compound mixers that the company owns and utilises in its current production. The mixers allow the company to produce various kinds of rubbers to the technical specifications of customers or for the final products. BZPG Stomil plans to close-down and sell the equipment of mixer no. 4, which will in turn lead to a decrease in the production capacity of the […] plant by ca. [25 – 50] %, i.e. by [3000 – 8000] tonnes of rubber compounds per year.

Second compensatory measure

(28) With regard to the second measure, the company intends to sell 4 lines of De Angeli hose braiding lines, which are utilised in the current production at the […] production plant ([…]) as part of the […] braiding lines owned by BZPG Stomil. The production capacity of all braiding lines is [2000 – 8000] km of hose per year in average. The set of the 4 De Angeli braiding lines is about [400 – 1600] km per year. The sale of the machinery thus amounts to a production capacity reduction of [5 – 25] %.

Conclusion on the two first compensatory measures

(29) In summary, the production capacities of BZPG Stomil (one unit being one ton or one kilometre of hose) are of [30 000 – 70 000] units /year before restructuring. The reorganisation of the company will increase this level to [30 000 – 70 000] units /year

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after restructuring. However, the two first compensatory measures will reduce this level to [30 000 – 70 000] units / year.

Third compensatory measure

(30) As regards the third compensatory measure, the company plans to abandon the production of soling sheets, used for the production of shoe soles as from 2013. The sales of soling sheets in 2010 (PLN [500 – 4000] thousand) and 2011 (PLN [500 – 4000] thousand) amounted respectively to [1 – 4] % and [1 – 4] % of the turnover of the company. The activity showed a profitability of [0 – 3] % in 20113.

Fourth compensatory measure

(31) As for the fourth measure, the company proposes to abandon the production of rubber conveyor belts manufactured in the […] plant as from the second half of 2012. In 2010, the value of the sales related to this activity amounted to PLN [500 – 4000] thousand (i.e. [1 – 4] % of the turnover of that year) and has shown an average profitability of [5–20] % in the last two years.

(32) The initial restructuring plan planned to stop this activity in 2014 only under the condition that the results would have not been satisfactory. However, in order to reach a sufficient level of compensatory measures, the Polish authorities proposed to advance the abandoning of this production by 1,5 year.

Conclusion on the two last compensatory measures

(33) Table 3. below summarises the impact of the two last compensatory measures on the future revenues and profits of the company. Table 3. Turnover and profits on sales – Impact of compensatory measures (CM) 3 and 4 (PLN thousand)

2012 2013 2014 2015

Turnover without CM […] […] […] […]

CM n° 3 0 […] […] […]

CM n° 4 […] […] 0 0

3 Although the third compensatory does not target as such a reduction of capacities, it reduces further these

capacities by [100 – 600] units /year (sale of two vulcanising presses). The figure of [30 000 – 70 000] units/ year after restructuring mentioned under point (29) will actually be of [30 000 - 70 000] units /year.

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Turnover with CM […] […] […] […]

Difference in % - [0–3] - [0–3] - [0–2] - [0–2]

Profits without CM […] […] […] […]

CM n° 3 0 […] […] […]

CM n° 4 […] […] 0 0

Profit with CM […] […] […] […]

Difference in % - [2–7] - [2–7] - [0-3] - [0-3]

2.4. Overview of the restructuring costs and sources of financing

(34) The list of restructuring costs amounting to PLN 9 448 600 is presented in Table 4 below.

Table 4. Type of restructuring measures and their costs (in thousand PLN)

TYPE OF RESTRUCTURING MEASURE COST Organizational restructuring 3 195

Implementation of new incentives system and increases in wages

[…]

Introduction of the new "[…]" trademark […] Increasing the company's market share in the […] market – renewal of certificates for […]

[…]

Development of a sales network for […] through "[…]" project

[…]

Development of the offer for […] and […] – marketing and advertising

[…]

Focusing external and internal sales networks and all marketing measures on the range of […]

[…]

1

Gaining new customers on foreign markets […]

Assets restructuring 6 253,6 2

Concentration of the manufacturing of […] in […] plant in […] and the […] plant in […]

[…]

9

Investments connected with the development of the […] production in the […] Department

[…]

Total: 9 448,6

3. ASSESSMENT OF THE AID

3.1 State aid in the meaning of Article 107(1) of the TFEU

(35) Under Article 107(1) of the TFEU, State aid is any support granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods and affects trade between Member States incompatible with the internal market.

(36) The grant in favour of BZPG Stomil that will be provided by the Minister of Treasury, and therefore granted from state resources is thus imputable to the State. The grant constitutes an economic advantage since it will provide BZPG Stomil with a direct grant that it would not have obtained under normal market conditions. The subsidy will be granted to the company alone; the advantage is therefore also selective. This reasoning was not contested by the Polish authorities.

(37) Since there is trade between the Member States in rubber products which the company manufactures, the measure is apt to improve the competitive position of the beneficiary in relation to its competitors in Poland and the EU, and it consequently distorts or threatens to distort competition and affects trade between the Member States.

(38) Therefore, the Commission considers that the contemplated direct grant in favour of BZPG Stomil constitutes state aid pursuant to Article 107(1) of the TFEU. The Polish authorities confirmed the fact that they will not grant the aid before the Commission has adopted a decision not to raise objections to the relevant aid.

Legal basis for the assessment of the compatibility of aid

(39) Article 107(3)(c) TFEU provides that state aid can be authorised where it is granted to promote the development of certain economic sectors and where this aid does not adversely affect trading conditions to an extent contrary to the common interest.

(40) The Commission considers the present measure to constitute a restructuring aid which must be assessed in the light of the criteria under the Guidelines, in order to establish whether it may be compatible with the internal market pursuant to Article 107(3) TFEU.

3.2 Eligibility of the company for restructuring aid

Company in difficulty

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(41) The Guidelines consider a firm to be in difficulty if it is unable to recover through its own resources or by raising the funds it needs from shareholders or on the market, and without the intervention of public authorities will almost certainly go out of business. Point 10 of the Guidelines spells out that a company is in difficulty where it has lost half of its registered capital and more than one quarter of that capital has been lost over the preceding 12 months or if it fulfils the criteria under its domestic law for being the subject of collective insolvency proceedings. The Guidelines in point 11 also list some usual signs of such companies, such as mounting debt, diminishing turnover, growing stock inventories, excess capacity, declining cash flow, rising interest charges or falling or nil net asset value.

(42) At the end of 2010, Stomil had lost 30% of its registered capital and, in view of the information provided by the Polish authorities, was not fulfilling the criteria under Polish law for being the subject of collective insolvency proceedings. BZPG Stomil is therefore not to be considered as being in difficulty under point 10 of the Guidelines. However, the Commission observed that the company was faced with a decreasing turnover and a high level of past losses and accumulated liabilities. Table 1 (see above under point (4)) illustrates that most of the criteria set out in point 11 of the Guidelines have been met. Over the 4 years the company sustained losses over the last three years, its turnover decreased from PLN 71,1 million to PLN 56 million, while the liabilities increased by ca. PLN 1,5 million. The total asset value of the company fell considerably reaching the value of PLN 39,6 million in 2010 out of the initial PLN 49,3 million in 2007. Also, the company's equity has been gradually falling since 2007, dropping by over PLN 11 million by the end of 2010. The rising amount of debt, coupled with a decreasing turnover, reveals the company's serious problems with liquidity, which due to the lack of private financing cannot be tackled by the company itself.

(43) Taking into consideration the overall financial situation of the company as described above, the Commission therefore finds that the company can be regarded as a company in difficulties under point 11 of the Guidelines. Moreover, the Commission notes that the company is not a newly created firm in the sense of point 12 of the Guidelines. BZPG Stomil started its activities in 1920 and operates under its current name as from 1971.

The 'one time, last time' principle

(44) According to point 73 of the Guidelines, if the firm concerned has already received rescue or restructuring aid in the past, including any un-notified aid, and where less than 10 years have elapsed since the rescue aid was granted or the restructuring period came to an end or implementation of the restructuring plan has been halted (whichever is the latest), the Commission will not allow further rescue or restructuring aid.

(45) Basing its analysis on the information provided by the Polish authorities, the Commission takes note of the fact that the company did not receive any rescue or restructuring aid in last ten years. Hence, the Commission finds that the company complies with the 'one time, last time' principle as laid down in point 72 et seq. of the Guidelines.

3.3 Restoration of long-term viability

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(46) In order to consider a measure compatible under points 34-37 of the Guidelines, the restructuring plan has to analyse in detail the problems which have led to the difficulties and to set out the means by which to restore the long-term viability and health of the firm within a reasonable timescale. This has to be done on the basis of realistic assumptions as to future operating conditions.

(47) The Commission observes that the company seeks to apply considerable modifications to the organizational structure of the enterprise and to rationalize the number of employees working in the various units of the company. The Commission likewise notes that the beneficiary decided to redesign its producing and marketing strategy so as to concentrate on the manufacturing and sale of its most profitable and sought-after products, i.e. […] where its reputation is -recognized. At the same time, BZPG Stomil intends to reduce its manufacturing of products that do not provide appropriate margins (e.g. […]) or that do not require application of modern technologies (e.g. […]). The other measures are mainly focused on asset restructuring leading to savings, cost reductions and modernization of the production process and overall management, which in turn have a positive impact on viability.

(48) As a result of the implementation of the restructuring plan the company’s situation is likely to improve considerably. The sale of the company's obsolete and cost-incurring real properties, the modernization of the technological production line, investment in the purchase of new machines and equipment, changes in the organization of the enterprise, and restructuring of marketing are all actions which should lead to the company regaining its competitive edge on the market and generating sustainable profits from its activities.

(49) According to the projected data presented in Table 2, the company will achieve financial results in the years 2012 – 2015 which will restore its long-term viability. In particular, as from the end of 2013, the company will have recovered almost [50 – 100] % of its registered capital and will record in 2014-2015 an average return on equity ("ROE") of [10 – 20] % which is in line with the ROE of listed polish companies from the chemical industry (Pulawy SA, Synthos SA, Police SA).

(50) In view of the above, the Commission concludes that BZPG Stomil will have regained the capacity to be a sustainable competitor on its own merits after the completion of the restructuring plan. Full implementation of the compensatory measures as described in points 24 et seq. does not change that conclusion: the loss of revenues due to these measures will not prevent BZPG Stomil to restore its viability.

(51) The Commission considers that these results would not be possible without the full implementation of the proposed restructuring plan. Therefore, the Commission considers that the proposed restructuring measures are capable of restoring long-term viability of company within a reasonable time scale.

3.4 Avoiding undue distortions of competition

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(52) Pursuant to points 38-42 of the Guidelines, measures must be taken to ensure that the aid's adverse effects on trading conditions are mitigated as far as possible. The aid shall not unduly distort competition. This usually means a limitation of the presence which the company can enjoy on its markets at the end of the restructuring period. The compensatory measures should be in proportion to the distortive effects of the aid and, in particular, to the size and relative importance of the firm on its market or markets. The degree of compensatory measures must be established on a case-by-case basis and with regard to the objective of restoring the long-term-viability of the firm. Moreover, according to point 7 of the Guidelines the Commission will request compensatory measures which minimise the effect on competitors.

(53) According to point 56 of the Guidelines, the conditions for authorising aid are less stringent as regards the implementation of compensatory measures in assisted areas. To this extent the Commission notes that PZBG Stomil is located in an assisted area according to Article 107(3)(a) of the TFEU.

(54) The Commission also notes that the relevant product markets for rubber products are at least EEA-wide in scope. PZBG Stomil has a very limited market share on these markets, which is inferior to 1% for all its products, except for high pressure hydraulic hoses where its share is ca. 2,5%.

(55) The Commission has also regard to the fact that amount of the aid is very limited, i.e. PLN 3 million (ca. EUR 0,75 million) and therefore its potential distortive effects are inherently restricted.

(56) There are four compensatory measures proposed by the Polish authorities: a reduction of production capacity in plant […] by [25 – 50] %, a reduction of braiding production capacity in plant […] by [5 - 30] %, a discontinuation of the production and sale of rubber soling sheets as of 2013 and, finally, a withdrawal from the production of rubber conveyor belts as of 2012.

(57) The implementation of the first two measures will result in the effective decrease by [5 - 30] % of the whole company's production capacity. This will prevent that BZPG Stomil benefits from more production possibilities after the restructuring supported by the State than before. The first measure reduces further the presence of the company on the market of final rubber products by limiting the production of rubber compound (production of plant […]) in comparison to the level forecasted in the restructuring plan. The second measure limits the presence of the company on the growing market of […] and […] (production of plant […]).

(58) With regard to the other two measures, the company agrees to forego a non-negligible amount of income and profits (see above Table 3) stemming from the sale of two product groups (shoe soles and conveyor belts) which were profitable in the past.

(59) The four compensatory measures relate to the company's main markets of activity. Reduction of the presence of the company on the market of […] is particularly important as this market presents growth perspectives that will benefit to competitors. However, the measures can be envisaged without compromising the restructuring plan that will return the firm to viability.

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(60) In view of the above, the Commission concludes that the proposed measures constitute a genuine compensation for the potential distortion of competition caused by the granting of the aid and are adequate to ensure that the state aid's adverse effects on trading conditions are minimized.

(61) Consequently, the aforementioned compensatory measures comply with points 38-42 of the Guidelines.

3.5 Aid limited to the minimum, own contribution

(62) The Guidelines clearly indicate that a significant part of the financing of the restructuring must come from own resources, including the sale of assets not essential to the company’s survival and/or from external financing at market terms. Therefore, for a large company, the level of own contribution must be at least of 50%.

(63) According to point 43 of the Guidelines, the own contribution must be real, i.e. actual, excluding all future profits such as cash flow and a sign that the markets believe in the return to viability of the company.

(64) According to the restructuring plan notified by the Polish authorities the company's own contribution was to comprise the following six elements a) to f) listed in Table 5:

Table 5. Own contribution

Type of contribution Planned income

a. Sale of undeveloped plots of land owned by the company

PLN 1 225 000

b. Sale or sale and leaseback of the company's developed real properties

PLN 1 661 000

c. Sale of Ciech S.A. shares PLN 566 000

d. Sale of redundant machinery and equipment

PLN 250 000

e. Rental of production hall in 2011-2015

PLN 2 200 000

f. Investment loan PLN 546 600

TOTAL: PLN 6 448 600

(65) The implementation of the compensatory measures will generate further revenues, but these are not known yet.

(66) After the restructuring process started, however, the company has so far only partially realised the aforementioned elements. The Polish authorities provided documents proving that for the time being PLN 4 590 400 have been obtained, as shown in Table 6.

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Table 6. Own contribution

Type of contribution Real income

a. Sale of undeveloped plots of land owned by the company

PLN 1 031 400

b. Sale or sale and leaseback of the company's developed real estate

PLN 1 744 000

c. Sale of Ciech S.A. shares PLN 473 400

d. Sale of redundant machinery and equipment

PLN 385 300

e. Rental of production hall in 2011-2015

PLN 956 300

TOTAL: PLN 4 590 400

(67) As for the sale of the real estate properties mentioned under points a) and b), sale of shares listed under c) and some of the redundant machines listed under d) the Polish authorities provided documents confirming the company’s real income resulting from the three types of sale. In all the aforementioned cases sufficient proof was provided for the Commission to establish that the purchasers had been private entities not related to the State.4 This amount represents 48,6% of the total restructuring costs. The Polish authorities, however, submit that the company expects further income from the measures presented in points d) and e). The Commission must therefore assess which of the future sources of funding that are presented as certain can actually be taken into account as relevant measures.

(68) The Polish authorities claim first that the company expects to obtain a further PLN 392 000 from the sale of other redundant machines that will become obsolete in 2012 due to the implementation of the restructuring measures. A first set of redundant machines and equipment has already been sold and the income from this sale proved to be higher than indicated in the restructuring plan. This is an indication that the equipment is indeed saleable and that the company will obtain some funds from this sale. However, the Polish authorities did not provide the Commission with an external evaluation of the assets that could ascertain their assumptions about the sales value of the remaining equipment. Therefore, the Commission cannot ascribe a precise value to these assets. With regard to the bank loan mentioned under point f) of Table 5 the Polish authorities did not provide a signed loan agreement but only a letter of intent from a commercial bank. The Commission does not consider this as sufficient proof to consider this element of the

4 The undeveloped plots of land mentioned under point a) were sold to a two companies: EKOR Sp. z o.o. and

Polcopper Sp. z o.o., the real estate property under point b) was the object of a sale and leaseback agreement concluded with a leasing company, Bankowy Fundusz Leasingowy Nieruchomości Sp. z o.o., and the shares of Ciech S.A. were bought by a natural person.

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company's own contribution as "real" or "actual" in the meaning of point 43 of the Guidelines.

(69) Finally, the Polish authorities submit that the income stemming from the lease of the production hall will be certainly higher than PLN 956 300 (point e) of Table 6) in view of the fact that the hall is only partially rented and that the company will soon find other lessee(s). However, the perspective of future revenues in that field cannot be considered as real and actual contribution.

(70) Therefore, the level of company’s own contribution remains at the level of 48,6 % as indicated above under point 67. Nevertheless, the Guidelines spell out in point 56 that in assisted areas the conditions for authorising aid may be less stringent as regards the size of beneficiary's contribution. In the present case, the company is located in an assisted area according to Article 107(3)(a) of the TFEU. Therefore, in view of the efforts already accomplished by the beneficiary in order to reach an amount close to 50% of own contribution, the Commission can accept the current level of 48,6% as being satisfactory.

3.6 Conclusion on the compatibility of the aid

(71) In view of the above, the Commission considers that the restructuring aid to BZPG Stomil fulfils all the conditions laid down in the Rescue and Restructuring Guidelines.

4. CONCLUSION

The Commission considers that the notified restructuring aid in favour of BZPG Stomil to be compatible with the Treaty on the Functioning of the European Union.

If this letter contains confidential information, which should not be disclosed to third parties, please inform the Commission within fifteen working days of receipt. If the Commission does not receive a reasoned request within that deadline, you will be deemed to agree to the disclosure to third parties and to the publication of the full text of the letter in the authentic language on the Internet site http://ec.europa.eu/eu_law/state_aids/state_aids_texts_pl.htm.

Your request specifying the relevant information should be sent by registered letter or fax to:

European Commission Directorate-General for Competition State Aid Greffe B-1049 Brussels Fax No: +32-2-296.12.42

Yours faithfully,

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For the Commission Joaquín Almunia

Vice-President of the Commission