No L 194/32 Official Journal of the European Communities 23.7.97 COMMISSION DECISION of 4 December 1996 concerning State aid in favour of Bestwood E.F. Kynder GmbH i. GV (Only the German text is authentic) (Text with EEA relevance) (97/450/EC) THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, and in particular the first subparagraph of Article 93 (2) thereof, Having regard to the Agreement establishing the Euro- pean Economic Area, and in particular the first subpara- graph of Article 62 (1) thereof, Having given notice in accordance with Article 93 of the EC Treaty to interested parties to submit their comments, Whereas: On 2 December 1995, the Commission decided to open proceedings under Article 93 (2) of the EC Treaty against State aid to Bestwood E.F. Kynder GmbH (‘Bestwood’), now Bestwood GmbH i. GV, in Mecklenburg- Vorpommern which was one of Germany’s biggest produ- cers of chipboard and fibreboard products with some 500 workers and has since filed for bankruptcy and disap- peared from the market. Bestwood was formerly State owned and was privatized by the Treuhandanstalt in 1991 when it received aid totalling DM 77 million in guarantees and DM 52 million in payments, mainly on the basis of aid schemes which had been approved by the Commission, in particular on the basis of the former Treuhandregime. Bestwood, however, had also received a long-term loan of DM 5 million at an interest rate of 4 % a year within the framework of the consolidation programme of the Land Mecklenburg- Vorpommern, an aid scheme which had been approved by the Commission in 1994. The approval was on condi- tion that loans awarded to enterprises exceeding the ceiling for small and medium-sized enterprises (SMEs) be notified to the Commission individually. The loan in question was not notified to the Commission although Bestwood was far from being an SME within the meaning of the definition in Commission Recommendation 96/280/EC (). The attempt to privatize the enterprise in 1991 was unsuccessful however. There were many irregularities in () OJ No L 107, 30. 4. 1996, p. 4. the privatization process and the purchaser was suspected of having misappropriated the aid granted during the privatization process. Consequently, the German public prosecutors started investigations. The former owner left for Switzerland. Meanwhile, a German court decided to allow the authorities of Mecklenburg-Vorpommern to seize control of all the assets of the former owner which are located in Germany in order to secure their claims for compensation. The irregularities linked with the privatization had led to continuing economic problems in the enterprise since it still produced in an old-fashioned, ineffective way using antiquated machines. In December 1994, the shares of Bestwood were transferred against payment of DM 2 to a shareholding company of the NordLB, a bank which is wholly State owned. The object of that transfer was to find as quickly as possible a new purchaser for Bestwood and to develop a restructuring concept which would ensure the future profitability and viability of the enterprise. In the context of that takeover, Bestwood had received a ‘risk exemption’ in the form of a guarantee by the Land Mecklenburg-Vorpommern for a loan by the NordLB for an amount of DM 25 million. That guarantee was not notified to the Commission either. Germany also indicated that it would try to privatize Best- wood a second time and that this privatization might require additional aid amounting to DM 100 million. The Commission concluded that both the DM 5 million long-term loan and the DM 2§ million guarantee consti- tuted aid which should have been notified to the Commission pursuant to Article 93 (3) of the EC Treaty. It also had serious doubts as to the compatibility of that aid with the derogations set out in Article 92 (3) (a) and (c) of the EC Treaty, in particular with the Community guidelines on State aid for rescuing and restructuring of firms in difficulties (3. It therefore decided to open the procedure under Article 93 (2) of the EC Treaty against the aid. In order to expedite the proceeding and to be in a ) OJ No C 368, 23. 12. 1994, p. 12.