Brussels turns off the tap. This Thursday, the European Commission sent notice to member states that the easing of the state aid rule that allowed countries to bail out companies hit by the pandemic will end on June 30th. This forces Spain to speed up the approval or rejection of requests sent to the rescue fund: 48 days remain, during which the government must satisfy the requests of 29 companies. Among them are Celsa (asking 550 million), Abengoa (249 million) and Air Nostrum (about 100 million). There are 2.436 million pending requests in total, according to sources close to the agency.
To put this amount in context and, above all, to understand the task facing the fund to support the solvency of strategic companies managed by the State Society for Industrial Participation (SEPI), it is enough to look at what has been approved since July 2020. Then the fund was created with a budget of 10 billion, and in the luggage there were only 21 approved aids in the amount of 2.191 million and 20 requests were rejected (requested 667 million). In other words, SEPI has more bailout issues to resolve in a month and a half than has been approved in nearly two years.
Logic leads us to think that it will be difficult to close all files in a timely manner. Despite this, the performer believes that it will be possible, since all processes are very advanced. “We have been working with this calendar and it will give time,” ministry sources insist. Consultants working on the analysis of various files also believe that this is possible. The problem, they say, will be when companies need to be asked to correct errors in the documentation: “They are the most interested, but they will have the shortest response time.”
This wide sleeve of financial aid from European governments without the penalty of state aid was launched in March 2020, in the early stages of the pandemic. Since then, it has been renewed every six months. Until now, when Vice President and Competition Commissioner Margrethe Vestager said the music would stop playing. The latest expansion was a breath of fresh air for the government and the fifty companies that were still waiting for the public injection. Thus, SEPI won six additional months, but the countdown expires again. “What is not given before the end of June cannot be given later,” sources close to the public say.
Thus, it remains to be seen how much of the $10 billion budgeted will be spent. Initially, it was thought that this game might even fail, but the financial situation turned out to be not so suffocating. Or they were able to turn to other alternative sources of funding. In fact, little more than half of the provisions were requested. This fund, as well as the Cofides fund for SMEs, which has another 1,000 million, is a tool of last resort when a country’s strategic firms have no other funding alternative.
Celsa, in the absence of creditors
He thoroughly knows all sides of the coin.
Among the 29 pending requests, the Celsa case stands out, claiming 550 million euros. This will be the largest aid approved by SEPI, over 475 million for Air Europa. In mid-March, he successfully passed the analysis phase, according to sources familiar with the process. However, the case has not yet been closed: it is stuck in the absence of an agreement between the company and its creditors.
“Until this agreement is closed, you cannot go to the governing council and the Council of Ministers,” explains a source in the administration. In addition, the rescue will have an amount in excess of 250 million, which corresponds to an equity loan (this will happen for the first time since Air Europa had 240 million on this item). For this reason, he will need to obtain approval from the Commission, further delaying the wait for the Rubiralta family company. “It looks like the case is not close to closing,” adds the same source.
Among the nearly thirty firms that are waiting to receive a public injection are also Seville’s Abengoa (it asked for 249 million), Naviera Armas Transmediterránea (nearly 120 million), Air Nostrum (about 100 million) and eDreams (more than 65 million). There are also 20 companies that have unsuccessfully completed the process: among them Lacrem – it was she who requested the largest amount among those rejected: almost 70 million – the hotel company Room Mate (52 million), as well as the travel agency Pangea and the publishing house Vicens Vives (both sent their request to Cofides Foundation).
The number of companies that do not meet the requirements between the SEPI fund and Cofides will increase in the coming weeks due to the existing time limit. In fact, this second body has already told companies that have applied for help since April 20 that it will be very difficult to find time to resolve them. SEPI received the last request at the end of 2021, according to sources close to the department, so this problem does not exist.
In total, Cofides received 131 requests for $1,234 million. That is, requests were received that exceed what was set at the beginning. However, what has been approved is still a third of the total: 33 aids (329 million) have been approved, 41 have been rejected (worth 424 million) and 57 (481 million) are still pending. “We will continue to work so that companies can restore their solvency, maintain their operations and guarantee jobs,” says Rodrigo Madrazo, CEO of Cofides. Among those who received a public injection are, among others, the BeOne Serviocio group (24.5 million) and the Balearic hotel company Cesgarden (18.6 million).
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