Zijne Excellentie De Heer Stef Blok Minister Van Buitenlandse Zaken Rijnstraat 8 NL – 2515 XP Den Haag
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EUROPEAN COMMISSION Brussels, 16.06.2020 C(2020) 3881 final In the published version of this decision, PUBLIC VERSION some information has been omitted, pursuant to articles 30 and 31 of Council This document is made available for Regulation (EU) 2015/1589 of 13 July 2015 information purposes only. laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union, concerning non-disclosure of information covered by professional secrecy. The omissions are shown thus […] Subject: State aid SA.57274 (2020/N) – The Netherlands Rescue aid in favour of ice skating arena Thialf Dear Sir, The European Commission ("the Commission") wishes to inform the Kingdom of the Netherlands that, having examined the information supplied by your authorities on the State aid referred to above, it has decided not to raise any objections, as it is compatible with the internal market pursuant to Article 107(3)(c) of the Treaty on the Functioning of the European Union (“TFEU”). The Commission has based its decision on the following considerations: 1. PROCEDURE (1) Following pre-notification contacts, on 25 May 2020, the Netherlands notified to the Commission its plans to grant rescue aid in favour of Thialf Onroerend Goed (OG) B.V., (“Thialf” or “the beneficiary”). Zijne Excellentie de Heer Stef Blok Minister van Buitenlandse Zaken Rijnstraat 8 NL – 2515 XP Den Haag Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel. +32 22991111 1 2. DESCRIPTION 2.1. The beneficiary (2) The beneficiary was established on 12 September 2003. The Thialf group consists of two limited liability companies: the parent company Thialf OG B.V. and its 100% subsidiary company Thialf B.V. The parent company’s sole object is the ownership and lease of the ice skating arena Thialf while its 100% subsidiary, Thialf B.V., is responsible for the operation of the ice skating arena. To that end, Thialf B.V. pays annual exploitation fees of EUR 1.050.000 which is, according to the Dutch authorities, in line with the market conditions. (3) The beneficiary employs 25 persons and has its registered office in Fryslân, a Province in the Netherlands. According to the company reporting, Thialf is a fully publicly owned company with as shareholders the Province of Fryslân (66.67%) and the municipality of Heerenveen (33.33%). Its turnover amounted to EUR 1.2 million in 2019. (4) The Thialf arena has a capacity of 12,500 seats and provides the infrastructure for professional ice skating sports as well as recreational use. The arena was renovated with EUR 50 million State aid to which the Commission raised no objections in 20131. It offers facilities for long track speed skating, short track speed skating, ice hockey, figure skating, ice speedway, and non-sports events. (5) Thialf is mainly used by local citizens for its recreational purposes. The Netherlands explain that the closest ice skating arena in the Netherlands is in Elfstedenhal, in Leeuwarden, some 35 Kilometres away from Thialf, and the next one is in Groningen some 60 Kilometres away. On the sport competition side, Thialf hosts every year during a limited number of days several main skating events like the Dutch, European and World championships, and one or two Speed Skating World Cup events. (6) The Dutch authorities explain that Thialf’ B.V.s operations are not profitable with the current package of activities and related costs. The ice skating arena is predominantly used for recreational purposes in terms of total number of visitors as well as time of use of the arena. However revenues from recreational activity account only for around […]* % of annual turnover. The Dutch authorities estimate that the entry price for recreational activities should need to be increased by 800% to make the arena profitable, which of course would have an effect on the demand and is, in their view, not realistic. The operations results became negative already in 2016 and continued to be negative in 2017, 2018 and 2019. Due to these negative results on operations, in the last season September 2019 to March 2020 Thialf B.V. was not able to pay its exploitation fee to its parent company. Until this year, Thialf was able to absorb the losses of its daughter company but with the loss of Thialf B.V. amounting to EUR -1 million for the financial year 2018/2019, the 1 Commission decision of 13.12.2013 in case SA.37373 (2013/N) – The Netherlands – Contribution to the renovation of ice arena Thialf in Heerenveen. * Confidential information 2 consolidated cash flow remained negative and resulted in a liquidity crisis at the group level as well. (7) These operating losses during the most recent years accumulated to a decrease of Thialf’s equity capital. According to financial reporting for the last financial year ending in September 2019, Thialf recorded cumulated losses of more than 50% of its subscribed capital. In effect, the cumulated losses of Thialf amount to EUR […], whereas its subscribed capital, including share premium amounts to 3.7 million. (8) This structural liquidity crunch worsened with the COVID-19 outbreak. The decision of the Dutch authorities to prohibit events with more than 100 participants prompted Thialf to close on 12 March 2020, four weeks before its planned end of season. The estimated loss from early closure amounts to EUR […]. 2.2. Description of the State guarantee on / the rescue loan (9) As described in its notified legal basis in the form of a (draft) loan facility agreement2, the rescue aid consists of a loan amounting to EUR 2 million. In line with their respective shareholdings, the municipality of Heerenveen will provide 1/3 of the funds and the Province of Fryslân will provide 2/3 of the loan. The loan agreement will be entered into with the Province of Fryslân only. (10) The loan shall be granted for the maximum period of six months. The loan will bear interest at a rate of 3.69% for the first six months (base rate Euribor one year + 400 basis points) and 4,19% after six months (base rate Euribor one year + 450 basis points), meaning that is not lower than the reference rate set out in the Reference Rate Communication for weak undertakings offering normal levels of collateralisation, which is currently 1-year IBOR plus 400 basis points3. (11) The Dutch authorities have provided a liquidity plan setting out the beneficiary’s liquidity needs for a six month-period beginning July 2020 until December 2020 based on expected operating revenues and ordinary costs of the business. The projections of the company's cash flows for the next six months show a cumulated shortfall of EUR […] by December 2020, extending further thereafter. The rescue loan is to be exclusively used to finance the operating costs, in particular the maintenance costs, the staff related costs and financing costs. (12) The Netherlands has committed to communicate to the Commission a restructuring plan for Thialf not later than six months after the rescue aid has been authorised. (13) Finally, the Dutch authorities confirmed that the beneficiary has not received any rescue or restructuring aid in the past ten years. 2 Overeenkomst van geldlening tussen Provincie Fryslan als Kredietgever en Thialf OG B.V. als Kredietnemer (Concept). 3 Communication from the Commission on the revision of the method for setting the reference and discount rates, OJ C 14, 19.1.2008, p. 6. 3 2.3. Counterfactual to the Measure (14) The Dutch authorities explained that the beneficiary cannot obtain bank loans for the amount of the aid under the current circumstances. This is due to Thialf’s liquidity crunch as well as to the outlook of the continuation of the loss-making operations of Thialf without a restructuring of its activities. These circumstances are aggravated by the uncertainty caused by the COVID-19 crisis, which led to the early closure of the facility before the usual seasonal term. Therefore private banks will not be prepared to grant a loan to Thialf under conditions that worsen their financial position even more. (15) The Dutch authorities also explained that Thialf could not obtain the money it needs from sales of some of its assets because their value is significantly lower than the amount of cash needed. Furthermore, the assets are not liquid in the short time, since they are strictly specialised for the intended purpose of an ice skating rink. (16) Therefore, in the absence of the rescue loan, the Netherlands claims that the beneficiary would go out of business, which would result in the direct loss of services provided by the ice skating arena. (17) The Dutch authorities also explained that there are two important roles ice skating arena Thialf plays. One is related to the use by the local population of which […] used the arena for their recreational ice skating activities in the season 2018/2019. As explained in recital (5), there is just one other ice skating arena in the province of Fryslân that has been renovated in 2015 and which may overlap in the catchment area with Thialf. However, the Dutch authorities clarified that each arena attracts mainly its own visitors due to the low willingness of recreational users to travel. The next ice skating arena is at 66 km in Groningen and clearly out of the catchment area of Thialf. Therefore, the closure of Thialf would deprive the citizens nearby of using Thialf’s arena. (18) The other significance of Thialf is related to the professional ice skating sport. The Dutch authorities claim that, in case of Thialf’s `exit, there would be a risk of disruption to an important service which is hard to replicate.