15 . 8 . 97 I EN I Official Journal of the European Communities No C 250/3 STATE AID C 35/97 (ex NN 129/96) Germany (97/C 250/03 ) (Text with EEA relevance) (Articles 92 to 94 of the Treaty establishing the European Community) Commission notice pursuant to Article 93 (2) of the EC Treaty to other Member States and interested parties concerning aid the German Government intends to grant to Triptis Porzellan GmbH, Thuringia The Commission has sent the German Government the an investor, Mr Marquart . The purchase contract following letter, informing them that they have decided obliged the investor to keep 280 employees up to to initiate Article 93 (2 ) proceedings . September 1996 and invest up to an amount of DM 18 million up to December 1997 . At present, the enterprise employs 326 workers . The balance sheet value amounted 'I. Procedural Aspects to DM 42,703 million (ECU 22 million) at the end of 1995 . By letter dated 5 November 1996 , registered the same day, your Government notified the Commission of the Under the privatization contract the following aid above mentioned aid . The annexes were transmitted by measures for Triptis were agreed : letter dated 12 November, registered on 13 November . (in DM) 1 . redemption of a liquidity loan, The case was discussed at a meeting with your auth­ guaranteed by the THA , including orities on 7 January 1997 . Your Government transmitted interest 19 260 000 further information by letter dated 29 January 1997 , registered on 30 January 1997 . As the aid had already 2 . redemption of a loan, secured by a land been made available before it was notified, Article 93 ( 3 ) charge , including interest 2 000 000 of the EC Treaty was not complied with . The aid was therefore registered as an NN case . 3 . debt relief of an investment loan including interest 795 000 4 . waiver of repayment of shareholder's II . Facts loan 4 459 000 Triptis Porzellan was founded in 1891 under the name 5 . granting of an interest-free loan, settled with loss cover 8 200 000 Unger & Gretschel . After the Second World War the factory was administrated by Soviets Russia . Today's Total 34 714 000 factory was rebuilt from 1959-1962 . In the former GDR the state-owned VEB Porzellanwerk It should be emphasized that measures ( 1 ) to (4 ) refer to Triptis was part of the fine ceramics conglomerate Kahla liabilities with date of origin before privatization . Only (Kombinat Feinkeramik Kahla). It had no trade mark of the granting of the interest-free loan, amounting to DM its own and no proper distribution system . 8,2 million, which was settled with loss cover afterwards, constituted "liquidity" aid for the privatized enterprise and the investor . On 1 July 1990 when the THA (Treuhandanstalt) took over VEB Porzellanwerk Triptis, there were about 900 employees . The capacity amounted to 6 000 tonnes All measures are calculated with an aid intensity of gross . In February 1991 the factory was renamed Triptis 100 % . As the enterprise was in difficulties, the measures Porzellan GmbH . fell under the Treuhand regime and remained within its thresholds . In September 1993 the enterprise was privatized . The Commission is not certain on the procedure followed for the privatization . At this time the capacity still amounted The enterprise produces and develops tableware and also to 6 000 tonnes gross . The shares were sold to makes innovative use of porcelain for collection articles, Mr Sarsted , Triptis GmbH manager since 1992 and to presents and leisure time articles . No C 250/ 4 MEN"! Official Journal of the European Communities 15 . 8 . 97 Triptis Porzellan GmbH is situated in the new German Out of this loan, on 19 June 1996 DM 4,730 million was Land of Thuringia, an assisted area within the meaning awarded for loss cover in 1995 , on 23 September 1996 of Article 92 (3 ) (a) of the EC Treaty ( 15,9% unem­ DM 2,670 million was awarded for loss cover up to the ployment rate in comparison to the 10,8 % average third quarter 1996 and on 2 July 1996 DM 0,6 million unemployment rate of the EU). The secondary labour was awarded for a liquidity loan . The amount was only market (provisional measures, further vocational training awarded after certified accountants had submitted a etc.) amounts to 10,5 % . certificate confirming that it was necessary . Triptis is still regarded as the principal employer in East Thuringia , in particular because the village Triptis itself Thanks to these provisional measures Triptis has had the has only 5 000 inhabitants . time to obtain financial commitments from various interested parties . In early 1995 the management realized that the restruc­ turing of the enterprise could not be carried out successfully with its own financial resources . Therefore On this basis in 1996 the company was able to organize the Bundesanstalt fiir vereinigungsbedingte Sonde­ raufgaben (BvS) was asked for financial support. The a concerted action by all parties involved which aimed at BvS asked for the transmission of a restructuring plan, in supporting the restructuring process and avoiding the order to assess the situation of the enterprise and its company's bankruptcy. The bank of Hessen (Hessische Landesbank) is waiving repayment of a loan of DM 10 development potential . In January 1996 Triptis Porzellan million, the employees are waiving parts of remuneration GmbH presented its restructuring plan to the BvS . and fringe benefits amounting to DM 2,4 million for the years 1996-1998 and the shareholders Mr Saarstedt and In 1996 the enterprise had a liquidity crisis for the Mr Marquart are bringing in new cash amounting to following reasons : DM 100 000 each . The BvS wishes to contribute to the restructuring process by waiving repayment of the DM 8 — the enterprise was privatized only at the end of 1993 million loan . because of difficulties in finding an investor. From 1990-1993 no restructuring measures had taken place, and a lack of any overall concept made reasonable planning impossible, The restructuring concept was approved on 12 March 1996 and 20 August 1996 by the BvS's Leitungsausscbuft, — the type of privatization (management buy-out) an independent committee of experts . (In March the typically results in a company with a relatively weak provision of the loan was approved, in September the capital base, waiver of this loan) The committee considered the devel­ opment of Triptis GmbH positive . — due to the late privatization new investment was made later than expected . Therefore expected cost­ reduction took place too late and the enterprise made higher losses than expected . The enterprise had to The plan was based on the following elements : borrow further funds, — Triptis was part of the fine ceramics conglomerate — investment in improved production facilities without Kahla . It had no trade mark of its own , and no increasing capacity. The privatization concept proper distribution system . Because of the disap­ estimated that investment amounting to DM 18 pearance of the Eastern markets Tripits had to million would be required to make the company conquer new markets . After privatization the successful . In the planning for 1994/ 1995 the need enterprise not only had to be rebuilt but also had to for investment was accumulated to DM 19,3 million develop a selling/distribution system in new markets . up to 1998 . Since the privatization more than DM 17 Therefore immediately after privatization the million has been invested, mainly in a whiteware enterprise made a difficult operational start and plant. All the investments take environmental aspects acquired high liabilities, into account, — most of the losses Triptis made are due to rising interest charges . In 1995 all liabilities amounted to — financial restructuring, in particular with a view to DM 30,915 million, the liabilities towards credit discharge of liabilities amounting to more than institutions amounted to DM 26,636 million . The DM 30 million in 1995, situation became critical and the banks together with the BvS were requested to approve a restructuring plan . — development of operating costs . Material costs are to rise from DM 9 744 000 in 1995, DM 9 292 000 in In order to support the restructuring process the BvS 1996 and DM 10 775 000 in 1997 to DM 12 191 000 first provided a bridging loan of DM 8 million . The in 1998 and personnel costs from DM 14 313 000 in interest amounts to 4,4% ; the duration is up to 31 1995 , DM 12 940 000 in 1996, DM 13 805 000 in December 1998 . 1997 to DM 15 044 000 in 1998 , 15 . 8 . 97 EN Official Journal of the European Communities No C 250/ 5 — annual turnover already increased from DM Since this aid was not based on approved aid schemes , it 15 438 000 in 1992 to DM 20 222 000 in 1995 and was notifiable individually pursuant to Article 93 ( 3) should amount to DM 36 380 000 in 1998 . The before its implementation . The German authorities did turnover should come from a higher quantity of sales not comply with this requirement since the loan was and from obtaining better prices . Price reduction is awarded without previous approval by the Commission . not used as a major commercial strategy . On the Thus , the aid is formally illegal . This loan will now be contrary, the company is continuing to focus on the waived . high-quality segments of the market . Market devel­ opment outside of the EU is also a major devel­ opment, The notified waiver of DM 8 million proposed by the BvS falls within the scope of Article 92 ( 1 ) of the EC Treaty and Article 61 ( 1 ) of the EEA Agreement because — operational improvement in the area of increased it constitutes aid , granted by public authorities , which efficiency in the purchasing process , human-resource distorts or threatens to distort competition between motivation and information processing , Member States by favouring certain undertakings or the production of certain goods .