Wednesday, February 27, 2008

EU orders Romania to recover 27 mln eur state aid from Automobile Craiova

BRUSSELS, Feb. 27, 2008 (Thomson Financial delivered by Newstex) -- The European Commission said that following its in-depth investigation into the privatisation of Automobile Craiova (formerly Daewoo Romania), the Romanian government must recover 27 mln eur.

Competition Commissioner Neelie Kroes said: 'Imposing conditions on a privatisation normally lowers the sales price, so that the state loses revenue and the privatised activity gains a selective advantage'.

The Romanian authorities attached specific conditions to the privatisation, in particular the achievement of a minimum production level of 200,000 cars in the fourth year after the privatisation, the continuation of the current activity for four years and the maintenance of all former employees of Automobile Craiova and Daewoo Romania.

Ford Motor Co (NYSE:F PRS) (NYSE:F PRA) (NYSE:F) was the only company willing to make an offer under these conditions. It offered a purchase price of 57 mln eur and won the tender.

The Commission's investigation revealed that the conditions had lowered the sales price. The market value of Romania's 72.4 pct stake in the core industrial assets bought by Ford was estimated at 84 mln eur, the commission said.

The granting of the aid did not comply with any of the common interest objectives for which aid can be authorised in the EU. The Commission has therefore ordered a full recovery of the aid.

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