January 23 (SeeNews) - The European Commission said it has found that Croatia's plans to grant its Uljanik shipyard a state guarantee for a 96 million euro ($117.4 million) loan are in line with EU State aid rules.
The measure will allow the company to meet urgent liquidity needs while preparing a restructuring plan, whilst competition distortions are limited, the European Commission said late on Monday.
"The Croatian State guarantee will help the Uljanik shipyard to continue operating and maintain 1,800 jobs, while they work out a sound restructuring strategy to ensure its future. We approved it today. The restructuring plan must return the company to long-term viability without continued public support, to preserve jobs in Istria on a sustainable basis," commissioner Margrethe Vestager, in charge of competition policy, is quoted saying.
On January 15, Croatia completed its notification to the Commission of plans to grant a state guarantee on a 96 million euro loan in favour of Uljanik Shipyard.
The company, part of the Uljanik group, is located in Pula, in the county of Istria, and employs around 1,800 people. It has been in financial difficulties for several years due to the adverse effects of the financial crisis on the shipbuilding sector in general, and on the resulting low orders for new vessels in particular.
The Commission explained that the aid to Uljanik is necessary to prevent it from going out of business immediately and avoid significant job losses. The company's liquidity needs over the next months are based on reasonable assumptions and will be monitored by an independent auditor on the basis of weekly liquidity plans, it said, adding it has obliged Croatia to notify a restructuring plan for the company within a maximum of six months.
"The Commission therefore concluded that the measure will help preserving jobs in the region of Adriatic Croatia, where unemployment is significantly higher than the EU average," it noted.
Earlier this month, Uljanik said that Italy's Palumbo Group is interested in taking part in the process of restructuring and diversification in the company.
Uljanik earlier said it has also received a letter of intent from Croatia's Kermas Energija.
($=0.8176 euro)