3. 5. 94 Official Journal of the European Communities No L 112/71 COMMISSION DECISION of 12 April 1994 concerning aid to be granted by Germany to the steel company Sichsische Edelstahlwerke GmbH, Freital/Sachsen (Only the German text is authentic) (94/260/ECSC) THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Coal and Steel Community, and in particular the first and second paragraphs of Article 95 thereof, After consulting the Consultative Committee and with the unanimous assent of the Council, Whereas : The Community steel industry is currently experiencing its most difficult period since the first half of the 1980s. This is due to the general slowdown in the economy, which has had significant effect on industrial activities in general, and on the steel industry in particular, leading to a serious imbalance between supply and demand, accom- panied by a collapse in prices. In addition, the interna- tional market generally has been weak : there is pressure from imports and there has been a trade dispute with the United States of America affecting substantial Community exports to that market. All of these factors have combined to aggravate the financial situation of almost all steel companies in the Community. 11 On 18 January 1993, Germany notified the Commission of a plan of the Treuhandanstalt, a public body in charge of the privatization of the State-owned enterprises of the former German Democratic Republic, to grant aid to its steel company Sichsische Edelstahlwerke GmbH, Freital/ Sachsen (hereinafter referred to as ‘SEW Freital’) in the framework of its privatization, with a request for the application of Atticle 95 of the ECSC Treaty in respect of the aid measures that cannot be approved under Commis- sion Decision No 3855/91/ECSC (") (Steel Aid Code, hereinafter referred to as ‘the SAC)). The company in question was founded in the 19th century and is held by the Treuhandanstalt since the () OJ No L 362, 31. 12. 1991, p. 57. German economic, monetary and social unification in June 1990. The undertaking was offered for sale in an unconditional and open bidding procedure. Five appli- cants demonstrated interest in the acquisition of SEW Freital. Following talks between the Treuhandanstalt and those five applicants, concrete contractual negotiations were conducted until October 1992 with three of them. While one of the remaining three withdrew its offer in August 1992, the proposal of the second was considered not to be backed by a reliable financial plan. The private West-German Boschgotthardtshiitte O. Breyer GmbH (hereinafter referred to as ‘BGH’) remained as sole bidder. The purchase contract was signed in December 1992, inter alia, subject to approval by the Commission. Through is contract, SEW Freital has been taken over by SEW Edelstahl GmbH and Co Holding, which is entirely owned by BGH. The plan of the purchaser provides for a reduction of the hot-rolling capacity of the company by at least 160 kt/y (47 %) and a reduction of the crude-steel capacity by 100 kt/y (33 %) compared to the situation on 1 July 1990. The comany will close down all existing hot-rolling facili- ties and replace them by a merchant-bar mill with a capa- city of 180 kt/y of which some parts will be provided to the company by BGH for free. It will close down all of its remaining crude-steel facilities and replace them by an electric arc furnace with a capacity of 200 kt/y. The capa- city reduction will be accompanied by a substantial reduc- tion in the workforce, namely by 49 %. The privatization provisions include aid elements that are incomptible with the ECSC Treaty and with the provi- sions of the SAC. According to the Commission’s esti- mates, this aid amounts to a maximum of DM 274 million, serving the following purposes : — a maximum amount of DM 34 million has been accorded to cover social charges relating to the release of 1056 of 2166 employees, — a maximum amount of DM 189 million is to cover debts accumulated until privatization, — a maximum amount of DM 42 million which the Treuhandanstalt will pay to the company for repair and maintenance of installations,