The European Commission has approved, under EU State aid rules, Spanish plans to set up a €1 billion recapitalization fund that will invest in certain companies affected by the coronavirus outbreak. The scheme was approved under the State aid Temporary Framework.

The scheme will be implemented through a recapitalization fund, which goes under the name ‘Recapitalization Fund for companies affected by the COVID-19 outbreak’, with a budget of €1 billion. Under the scheme, the aid will take the form of debt and recapitalization instruments, in particular equity and hybrid capital instruments.

This measure is open to companies established in Spain and active in all sectors except the financial one, with total net yearly revenues of a minimum of €15 million and up to €400 million on a consolidating basis and that are now facing capital needs due to the coronavirus epidemic. Companies that have already received support through the “Solvency Fund for Strategic Enterprises’ approved by the Commission in July 2020 are not eligible for aid under this new scheme.

The Commission found that the Spanish measure is in line with the conditions set out in the Temporary Framework. Especially with respect to recapitalization measures and the respect to aid in the form of subordinated debt instruments. Also, only companies that were not considered to be in financial difficulty already on 31 December 2019 are eligible for aid in this scheme.

The Commission concluded that the measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of Spain. On this basis, the European Commission approved the measure under EU State aid rules.

Image © European Commission, 2020