Cloudcall Share Discussion Threads

[waldron] 08/7/2004 12:01

PARIS (AFX) - The French government may soon sell 10 pct of France Telecom
SA, equivalent to 5 bln eur, according to French newspaper L'Agefi, citing
banking sources.
[e-mail]
sr/cml

[ariane] 02/7/2004 11:08

BRUSSELS (AFX) - The European Commission could instruct France Telecom to
repay 1 bln eur in back taxes to the French government as soon as July 14, said
a commission source.
The matter is on the commission's agenda for that date. However, there
remains "some resistance" within the executive body to actually considering the
case then, the source told Agence France-Presse.
Yesterday, sources close to the commission told AFX News that it will order
the repayment following a probe it opened 18 months ago into whether the French
telecom operator had received 1 bln eur in illegal subsidies in the form of tax
breaks
France Telecom said it would lodge an immediate appeal against any such
judgement.
[e-mail]
aud/bpi/jms

[ariane] 01/7/2004 14:29

(updates with France Telecom comment dismissing claim; details of probe)
BRUSSELS (AFX) - The European Commission will order France Telecom to repay
1 bln eur in back taxes to the French government and then investigate a further
7 bln eur of state aid it believes the company may have been offered, said
sources close to the case.
The decisions could be taken as early as this month, the sources said.
France Telecom said it would lodge an immediate appeal against any such
judgements as these would be "without any foundation".
The commission opened a probe 18 months ago into whether the French telecom
operator had received 1 bln eur in illegal state subsidies in the form of tax
breaks.
This probe also considered if comments made by then finance minister Francis
Mer, who vowed to maintain the company as a going concern, constituted a further
element of state aid.
The additional probe is necessary as, during the investigation, economic
consultants hired by the commission considered that comments by Mer on the issue
might have boosted the company's credit ratings, giving it an unfair competitive
advantage.
A source said: "The decision to open the probe has specific reference to
comments made by Mer, but there are other statements which are only mentioned in
an indirect way. Obviously the commission needs to deepen the probe to examine
these."
Some sources view Mer's comments as inconsequential, though the consultants
- Nera - concluded in their report that their market value could be as high as 7
bln eur.
"So the commission will examine this full amount," a source added.
A France Telecom spokesman said the company is "totally unconcerned" about
the commission investigation, and that it has been aware of speculation
concerning both the sums in question since March.
But it is sticking to advice from independent experts who have told the
company that cases of this type are "without any foundation".
If the commission decided to order a repayment, France Telecom would
immediately appeal to the European Court of Justice, the spokesman added.
On a more positive note for France Telecom, the commission is set to dismiss
a complaint made by rival operator Bouygues Telecom SA that the government
distorted competition by giving France Telecom a reduction in the fee for its
UMTS third generation mobile telephony licence.
Bouygues lodged the complaint on June 3.
One of the sources said: "The commission will dismiss this because the EU
directive concerning UMTS licences gives states a lot of discretion about how to
fix tariffs, so long as the tariffs are not discriminatory."
France Telecom unit Orange should originally have paid 4.95 bln eur to the
French government for its UMTS licence - the same sum as did rival SFR, owned by
Vivendi Universal SA and Vodafone Group PLC. However, after the 3G sector ran
into difficulties, the two groups were allowed to pay only one-eighth of that
price.
Bouygues, France's third mobile operator, which did not take part in the
initial auctions for UMTS licences, only acquired a licence after the prices
were reduced.
[e-mail]
ed/mg/jms

[ariane] 01/7/2004 14:28

(updates with France Telecom comment dismissing claim; details of probe)
BRUSSELS (AFX) - The European Commission will order France Telecom to repay
1 bln eur in back taxes to the French government and then investigate a further
7 bln eur of state aid it believes the company may have been offered, said
sources close to the case.
The decisions could be taken as early as this month, the sources said.
France Telecom said it would lodge an immediate appeal against any such
judgements as these would be "without any foundation".
The commission opened a probe 18 months ago into whether the French telecom
operator had received 1 bln eur in illegal state subsidies in the form of tax
breaks.
This probe also considered if comments made by then finance minister Francis
Mer, who vowed to maintain the company as a going concern, constituted a further
element of state aid.
The additional probe is necessary as, during the investigation, economic
consultants hired by the commission considered that comments by Mer on the issue
might have boosted the company's credit ratings, giving it an unfair competitive
advantage.
A source said: "The decision to open the probe has specific reference to
comments made by Mer, but there are other statements which are only mentioned in
an indirect way. Obviously the commission needs to deepen the probe to examine
these."
Some sources view Mer's comments as inconsequential, though the consultants
- Nera - concluded in their report that their market value could be as high as 7
bln eur.
"So the commission will examine this full amount," a source added.
A France Telecom spokesman said the company is "totally unconcerned" about
the commission investigation, and that it has been aware of speculation
concerning both the sums in question since March.
But it is sticking to advice from independent experts who have told the
company that cases of this type are "without any foundation".
If the commission decided to order a repayment, France Telecom would
immediately appeal to the European Court of Justice, the spokesman added.
On a more positive note for France Telecom, the commission is set to dismiss
a complaint made by rival operator Bouygues Telecom SA that the government
distorted competition by giving France Telecom a reduction in the fee for its
UMTS third generation mobile telephony licence.
Bouygues lodged the complaint on June 3.
One of the sources said: "The commission will dismiss this because the EU
directive concerning UMTS licences gives states a lot of discretion about how to
fix tariffs, so long as the tariffs are not discriminatory."
France Telecom unit Orange should originally have paid 4.95 bln eur to the
French government for its UMTS licence - the same sum as did rival SFR, owned by
Vivendi Universal SA and Vodafone Group PLC. However, after the 3G sector ran
into difficulties, the two groups were allowed to pay only one-eighth of that
price.
Bouygues, France's third mobile operator, which did not take part in the
initial auctions for UMTS licences, only acquired a licence after the prices
were reduced.
[e-mail]
ed/mg/jms

[grupo guitarlumber] 30/6/2004 15:11

PARIS (AFX) - France Telecom's general secretary Jean-Yves Larrouturou said
any demand by the EU Commission that the company pay back millions of euros of
unpaid taxes would be without merit.
The Financial Times reported today that the Commission could require the tax
repayments as part of its investigation into an estimated 1 bln eur of state aid
given to the operator from 1994-2003.
"From an economic as well as legal point of view, there is no basis for a
negative decision from the Commission," Larrouturou said in an interview with
Agence France-Presse.
He added that if the Commission requests the tax repayment, "we will go
before the European Court of Justice."
[e-mail]
afp/js/cmr

[maywillow] 15/6/2004 15:34

EU Sues France for Shielding France Telecom From Cable Rivals
June 15 (Bloomberg) -- European Union regulators filed a lawsuit against France for protecting France Telecom SA by hindering the development of cable telephone services.

The European Commission's complaint to the European Court of Justice accuses France of breaching EU rules through measures that require only cable operators to consult with municipalities before offering phone and Internet services.

``France maintains burdensome arrangements for the provision of telecommunications services by cable,'' the EU's regulatory arm said in a statement in Brussels. The administrative requirements ``have the effect of seriously handicapping cable operators' business opportunities.''

The commission's latest move comes on top of an investigation into France Telecom's mobile-phone unit, a French government loan guarantee and the state-owned company's charges for access to its network.

[maywillow] 15/6/2004 14:02

PARIS (AFX) - Industry Minister Patrick Devedjian reiterated the government
does not intend to remain a majority shareholder in France Telecom SA.
Devedjian was speaking at the European telecoms forum held by French daily
Les Echos.
France Telecom chief executive Thierry Breton said at end-April the state
will hold 52.5 pct of the French telecoms company after its merger with its
Wanadoo internet unit on the basis of new shares being issued under the deal.
But in the event of the conversion of all bonds created when the company
terminated its UMTS alliance with Germany's MobilCom AG last year on top of the
Wanadoo merger, the state's holding would fall to 49.8 pct, Breton said.
The government said in April it wants to speed up the sale of state
holdings. Its stake in France Telecom is estimated to be worth around 25 bln
eur.
[e-mail]
cad/sr/lam

[ariane] 03/6/2004 20:05

BRUSSELS (AFX) - Bouygues Telecom has lodged a complaint against the EU
Commission, accusing it of not having investigated the distribution of UMTS
licences to its competitors Orange France and SFR-Cegetel in France, according
to the European Court of Justice.
Bouygues is accusing the EU of not having followed up its earlier complaint
over state aid given by the French government to Orange France and SFR via the
retroactive reduction in the amount which they had to pay for their UMTS
licences, granted in June 2001.
Under the conditions for the granting of UMTS licences set in 2001, France
Telecom SA unit Orange, and SFR, owned by Vivendi Universal SA and Vodafone
Group PLC, each originally owed 4.95 bln eur to the French government for their
UMTS licences. But after the third generation mobile telephony sector ran into
difficulties, the two groups were allowed to pay only one-eighth of the price.
Bouygues, France's third mobile operator, which did not take part in the
initial auctions for UMTS licences, only acquired a licence after the prices
were reduced.
In its latest complaint, Bouygues also criticised a series of other measures
which it said had benefited France Telecom.
aud/bpi/az/cmr/jsa

[maywillow] 28/5/2004 12:47

BRUSSELS (AFX) - The European Commission said it will be in contact with the
French government over the 500 mln eur earmarked for Electricite de France.
French Finance Minister Nicolas Sarkozy said EDF will receive 500 mln eur of
the proceeds from its privatisation.
Sarkozy also indicated the state's holding in the company would not fall
below 70 pct, against a previous commitment of 60-65 pct.
Commission competition spokesman Tilman Lueder said the commission has been
talking to the French government about other aspects of EDF, and said "we will
be in contact with" it over this fresh issue.
Lueder said the commission had yet to see the details of the French
government's plan, but that it had to respect EU state aid rules.
vm/cmr

[grupo guitarlumber] 27/5/2004 16:08

DUBLIN (AFX) - EU health commissioner David Byrne said the idea that
'national champions' deserve state aid is "completely wrong", following
yesterday's announcement by Alstom that it secured EU Commission approval for a
massive bailout plan, to be led by the French state.
"We believe in free competition and I hope the next commission president
will respect this principle, especially at a time when some of our most
important member states continue to believe national champions deserve state
aid," he said at the sidelines of a congress here.
Byrne never explicitly mentioned Alstom or the French government.
rc/ros/bh/lam/wf

[grupo guitarlumber] 25/5/2004 07:15

PARIS (AFX) - Bouygues SA unit Bouygues Telecom lodged a complaint with
authorities ten days ago against France Telecom SA unit Orange and Vivendi
Universal SA unit SFR for unfairly dominating the French mobile phone market.
Orange has 49 pct of the market while SFR has 36 pct, leaving Bouygues with
around 16 pct, Bouygues Telecom chief executive Gilles Pelisson said in an
interview with French daily Le Figaro.
"Faced with two players who hold 85 pct of the French market, it is
difficult for Bouygues Telecom to grow," Pelisson said, adding that French
telecoms regulator ART and the French government "are doing nothing to balance
out the market."
He said the French market is "very difficult to penetrate because of the
overwhelming domination of Orange and SFR, which is not kept in check by ART or
by the State."
"If we want to improve competition, there are ways," he said.
Pelisson said it is "an enormous advantage" that Orange is allowed to use
the outlets of parent company France Telecom to sell mobile phones.
Bouygues Telecom is complaining about subsidies of 100-150 eur made towards
the cost of handsets by an operator, and the time it takes to be able to change
a phone number when you switch operators.
"To change operator without changing number, you need two days in Belgium,
ten days in Italy, three days in Germany ... and three months in France!" he
said.
[e-mail]
sr/jfr

[grupo guitarlumber] 25/5/2004 07:14

PARIS (AFX) - Bouygues SA unit Bouygues Telecom lodged a complaint with
authorities ten days ago against France Telecom SA unit Orange and Vivendi
Universal SA unit SFR for unfairly dominating the French mobile phone market.
Orange has 49 pct of the market while SFR has 36 pct, leaving Bouygues with
around 16 pct, Bouygues Telecom chief executive Gilles Pelisson said in an
interview with French daily Le Figaro.
"Faced with two players who hold 85 pct of the French market, it is
difficult for Bouygues Telecom to grow," Pelisson said, adding that French
telecoms regulator ART and the French government "are doing nothing to balance
out the market."
He said the French market is "very difficult to penetrate because of the
overwhelming domination of Orange and SFR, which is not kept in check by ART or
by the State."
"If we want to improve competition, there are ways," he said.
Pelisson said it is "an enormous advantage" that Orange is allowed to use
the outlets of parent company France Telecom to sell mobile phones.
Bouygues Telecom is complaining about subsidies of 100-150 eur made towards
the cost of handsets by an operator, and the time it takes to be able to change
a phone number when you switch operators.
"To change operator without changing number, you need two days in Belgium,
ten days in Italy, three days in Germany ... and three months in France!" he
said.
[e-mail]
sr/jfr

[grupo guitarlumber] 14/5/2004 09:25

BRUSSELS (AFX) - France Telecom SA said the verbal support offered by French
finance minister Francis Mer constituted a state guarantee of 7.7 bln eur,
according to a report by economic consultancy Nera which was hired by the
European Commission.
France Telecom, which had to be rescued from a debt mountain with a
government-orchestrated recapitalisation two years ago, has been the subject of
a state aid investigation by the commission since Jan 2003.
Secretary-general of France Telecom, Jean-Yves Larrouturou, told AFP that
Nera's analysis, described as 'not pertinent' and in some respects even
'surreal' by the three high-level experts mandated by France Telecom, has left
the telecom company 'completely unconcerned'.
Nera examined not only the financial support given to the company but the
comments made by Mer that "if France Telecom would have difficulties, we would
take the adequate measures".
[e-mail]
afp/ed/jfr

[maywillow] 04/5/2004 06:45

Sarkozy holds key to fate of France Tel
By Paul Betts
Published: May 4 2004 5:00 | Last Updated: May 4 2004 5:00

France Telecom shares are back where they were 12 months ago. For all Thierry Breton's successful restructuring efforts, investors continue to shun the company's shares.


This is proving frustrating for the energetic Mr Breton, who after turning around the Thomson electronics group was brought in to sort out France Telecom's monstrous mess.

The government forked out €9bn as its contribution to last year's €15bn recapitalisation. Mr Breton subsequently launched an ambitious recovery plan. His industrial strategy, based on taking full control of the Orange mobile subsidiary and the Wanadoo internet business, is taking shape.

The problem is, what will Paris do next? Late last year, it passed a law allowing it to reduce its stake to below 50 per cent. The Orange public share offer and the recent Wanadoo deal have lowered it to about 50 per cent. Conversion of an equity-linked bond issue will take it lower.

This is worrying investors. Of all the state's listed holdings, France Telecom constitutes the richest and quickest opportunity for Paris to raise funds to prop up its deteriorating public finances - a cinch compared with the politically fraught problems of floating Electricité de France.

Until Paris discloses its intentions - selling shares or diluting its holding through a strategic operation with other industrial partners - investors will stay clear. Nicolas Sarkozy, the finance minister, is due to unveil today his privatisation priorities: a golden opportunity to put Mr Breton out of his misery.

[maywillow] 04/5/2004 06:39

Monti warns France over payments to Alstom
By Daniel Dombey in Brussels and Martin Arnold in Paris
Published: May 3 2004 21:21 | Last Updated: May 3 2004 21:21


Mario Monti, Europe's competition commissioner, warned France on Monday not to pour more subsidies into Alstom, the engineering group, but left the door open for an "industrial reorganisation" that might still involve the French state.


At the first face-to-face meeting between Mr Monti and Nicolas Sarkozy, French finance minister, the two men discussed the prospects for the struggling company, already the subject of a Brussels inquiry into an alleged €3.2bn ($3.8bn) of state aid.

Mr Sarkozy said that both had displayed a "common will" to solve Alstom's problems and that he would resume talks with Mr Monti as early as next week.

The French finance ministry will be sending a team to negotiate with top Commission officials from Tuesday.

"There are several options on the table," said Mr Monti's spokesman. "Some are promising [although] . . . all these options have their own advantages and disadvantages."

According to Commission officials, Mr Monti rejected the first of three options presented by Mr Sarkozy - in which Alstom would remain a stand-alone company, but Areva, the state-owned nuclear group, might buy a 15-20 per cent stake.

The Commission believes this is not a realistic scenario, since it would fail to assure Alstom's viability and would therefore create the risk of future bail-outs. In addition, it would be hard to prove that Areva was acting as an ordinary investor, rather than providing an additional subsidy.

However, the Commission was much more responsive to the two remaining options presented by Mr Sarkozy, both of which would involve industrial reorganisation.

One option is a full-scale takeover by Areva, which is 93 per cent government owned. The other would be a "double partnership", which could involve Siemens of Germany, Alstom's chief competitor in the French company's showpiece trains and turbines businesses.

Areva, which is reluctant to take on all of Alstom, has offered to take over the group's transport division, including the high-speed TGV train, leaving Germany's Siemens to fulfil its ambition of buying the turbines business.

Mr Monti has indicated a preference for this solution but has been warned by his staff that it could pose serious antitrust problems.

Some Commission officials now argue that General Electric's leading position on the world market could make a Siemens-Alstom deal possible, but admit that clearance could also have to come from other authorities such as the US and Japan.

[grupo guitarlumber] 16/4/2004 09:24

Something rotten in the state aid of Denmark


Denmark has come out as top offender in a list of European countries giving state money to prevent cash-strapped industries going to the wall, according to an EU paper out next week.

The Danes, along with Germany, Spain and Portugal, head a run-down of big spenders in the latest ‘state aid scoreboard’ to be published on Tuesday by the European Commission – despite an overall downturn in such handouts EU-wide.

European regulators frown upon cash boosts, rescue loans and tax breaks given by governments to ailing industries, fearing that such support impedes EU competitiveness.

Whilst Copenhagen spends 0.7 per cent of the nation's wealth on aid, Berlin, Madrid and Lisbon all weigh in close behind at 0.5 per cent of GDP.

In contrast, the United Kingdom, Finland, the Netherlands and Sweden enjoy good ratings on the scoreboard with the lowest level of aid spending of all 15 member states at only 0.2 per cent.

France, despite high-profile and controversial industry bail-outs involving companies such as Alstom, Bull and EDF, holds surprisingly steady with a mid-ranking position in the list of countries.

The state aid analysis chart adds there is a general downward trend in spending across Europe, with the average pan-EU standard falling from 0.5 per cent GDP in 2000 to 0.39 per cent in 2004.

The drop is experienced by 14 out of the 15 EU states, with Portugal and Ireland showing the greatest percentage fall.

Brussels will see the decline as a statistical vindication of its clampdown on illegal state aid, despite temporary leeway offered to European industries in dire straits such as shipbuilding and mining.

Indeed the scoreboard adds that manufacturing, fisheries, coal and transport are the four sectors experiencing most state aid activity.

The decline in aid help however is not as sharp as the fall in the early 1990s; before the payments started to rise again between 1997 and 1999 due to an increase of regional aid in Germany and Italy.

The report also sees the EU executive classify state funding into two distinct lists - so-called ‘good aid’ and ‘bad aid’.

Whilst ‘good aid’ reflects monies given to research and environmental projects in the EU, ‘bad aid’ signifies financial bail-outs, rescue plans and restructuring funds.

Just as Brussels is keen to promote the former scenario, aid falling into the second category remains a favourite bug-bear of the EU competition watchdog.

And the paper reports a rise in ‘good aid’, expressed as a percentage of the total average across the EU, with ‘bad aid’ falling to a lower level.

France: middle-ranking but high-profile

France may enjoy a middling position on the scoreboard, but the EU’s lawmaker, watching over competition policy, is all too aware of Paris in the context of state aid.

The decision this week by flagship power group Electricité de France to seek legal redress and overturn a Brussels’ demand to repay €1.2 billion in fiscal benefits to the state opens up a new avenue of tension between the two capitals.

EDF follows a line of run-ins between France and the European Commission over alleged state aid, including wrangles over engineering group Alstom, computer giant Bull and telecommunications operator France Telecom.

[grupo guitarlumber] 15/4/2004 07:24

LONDON (AFX) - The European Commission is investigating allegations that BT
Group PLC is receiving illegal state aid, after a complaint that the former
monopoly saves more than 1 bln stg a year in business rates through a favourable
deal with the Inland Revenue, reports The Times without citing sources.
The paper says that, if Brussels upholds the complaint, the telecoms group
will have to tear up the agreement, which covers the past eight years, and repay
the money it has saved, which runs into billions of pounds.
mps/lam

[waldron] 12/4/2004 08:55

Super-commissioner plan for EU threatens anti-subsidy drive
By Daniel Dombey in Brussels
Published: April 12 2004 5:00 | Last Updated: April 12 2004 5:00

Plans by the European Union's biggest states to create a super-commissioner could hamper Brussels' drive against government subsidies.


The idea of a super-commissioner was first raised by Britain, France and Germany at a summit in February. They proposed a vice-president of the Commission with the power to promote economic reform and competitiveness.

France and Germany want to use the super-commissioner to prevent the Commission from waging an "excessive" campaign against subsidies.

The UK is less enthusiastic and thinks that France and Germany would not win the necessary backing among European leaders to make deep-seated changes to anti-subsidy rules.

Paris and Berlin are also keener than London to encourage the Commission to look more kindly on mergers that would create European or national champions.

"There are different ideas on how to promote competitiveness and reform the European economy," said a UK diplomat, "but the Union as a whole is broadly set on the same path."

The Commission's push on reducing subsidies, which many officials contend waste public money and distort competition, has reduced EU "state aid" to the manufacturing, services and mining sectors from ?51.6bn ($62.3bn, £34bn) in 1997 to ?33.5bn in 2001.

Although the super-commissioner idea has not yet been endorsed by the full EU, the three big countries hope the idea will be backed at the Union's June summit, when a nominee for the next Commission president will also be proposed.

Under the plans endorsed by the three leaders, the super-commissioner would probably supervise other powerful commissioners.

"The vice-president of the Commission would be a strong signal that industry is important and [he or she] would have to fight against the deindustrialisation of the EU," said a French spokesman.

Mario Monti, the EU's current competition commissioner, has clashed with France recently over subsidies to Alstom, the engineering group, and Bull, the computer maker - although both packages are likely to win final Commission approval.

"In cases such as Alstom perhaps the Commission should have had a more balanced discussion and not just taken competition into account," said the French spokesman.

The Commission has already allowed member states a margin of latitude by permitting them to argue that apparent subsidies are really ordinary investments. Mr Monti is scheduled to leave his post in November, when the new Commission takes office.

"A mature competition policy fosters increased competitiveness as a core goal," said the Commissioner's spokesman.

Any relaxation of merger policy towards potential European champions could also be fraught with danger, since the EU also rules on all-US mergers.

[grupo guitarlumber] 11/3/2004 11:46

France Relaxes on 3G
03.10.04

French carriers SFR and Orange France (Paris: OGE - message board) have been thrown a 3G lifeline following the decision by telecom regulator Autorité de régulation des télécommunications (ART) to relax rules on the deployment of UMTS (Universal Mobile Telecommunications System) networks.

[grupo guitarlumber] 10/3/2004 11:05

PARIS (AFX) - Heinrich von Pierer, chief executive of Siemens AG, told
French Finance Minister Francis Mer that a government plan to raise taxes on GSM
mobile telecom licenses will reduce investment spending by the telecoms
industry.
Recent press reports have said the French government intends to raise 5 bln
eur from higher GSM fees, once current licenses expire in 2006 for Orange and
SFR, France's two largest mobile operators.
The government has not denied these reports.
In a letter to Mer, published by French daily La Tribune, von Pierer said:
"Any new tax on mobile services, either through fees or a levy on a percentage
of revenues, would reduce the level of investments, as it would create new risks
for operators from regulatory decisions in other countries."
Von Pierer said that since France is the first country in Europe to renew
GSM licenses, it should set a precedent for its neighbours by not raising the
GSM taxes.
Von Pierer is also a member of a committee set up by Prime Minister
Jean-Pierre Raffarin late last year to improve the attractiveness of investing
in France.
[e-mail]
afp/js/cmr

[grupo guitarlumber] 08/3/2004 17:12

BRUSSELS (AFX) - The European Commission is taking an even tougher line in
its state aid reforms in a move which could hinder the French government's
restructuring efforts in the cases of France Telecom SA and Alstom, but will
enter into force too late to be applied to Bull, EU sources said.
According to the latest version of the commission's restructuring and rescue
aid guidelines, obtained by AFX News, the commission wants to make companies
facing difficulties contribute a higher amount towards restructuring efforts.
An EU source said the commission is "tightening the screws" on governments
which try to bail out inefficient companies by offering endless subsidies. "The
subsidy culture has to stop," said the source.
Previously, the commission had planned to make companies contribute at least
35 pct of the total restructuring cost. However, the latest version of the
guidelines shows that the commission wants a minimum contribution of 50 pct.
"Such contributionis a sign that the markets believe in the feasibility of
the return to viability...Generally, large undertakings would be expected to
contribute at least 50 pct," said the latest version.
Sources said the commission is increasingly concerned by the bailouts being
offered by governments to keep their national companies afloat. Its decision to
tighten the rules follows the cases with France Telecom, Bull, Alstom and
Germany's Bankgesellschaft.
The commission also plans to put an end to astring of bailouts to one
company after the French government gave Bull a restructuring package, a rescue
loan and now plans to offer a restructuring package to help the company pay back
the rescue loan.
At present, governments are not allowedto grant a second batch of
restructuring aid to a company for up to ten years. The French government was
thus allowed to give Bull a rescue loan during the ten year period.
The commission decided following the rescue loan to Bull last year that it
has to ban rescue loans too during the ten year embargo period. Commission
officials said there was a danger that other companies would keep coming back
for more financing.
Now, following this latest turn in the Bull case, the commission wants to
ban restructuring loans for up to 10 years after a rescue loan is given. It will
also ban the granting of more than one rescue loan within a ten year period.
Lawyers said the commission's current guidelines on rescue and restructuring
aid are general and allow governments a lot of leeway in their refinancing of
companies in difficulty.
Bertold Baer-Bouyssiere, partner at Coudert Brothers, said: "It will be more
difficult for companies to qualify for restructuring aid. The European
Commission may have had the impression, rightly or wrongly, that in the past
many companies did not return to viability despite restructuring aid."
The new guidelines will be adopted by the commission in October.
[e-mail]
ed/jkm/