Brussels to question the sale of Efacec to DST
Portugal, Lisbon: The Government of Portugal made a pre-notification to Brussels of deal for the sale of Efacec to DST Group about two months ago.
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Portugal, Lisbon: The Government of Portugal made a pre-notification to Brussels of deal for the sale of Efacec to DST Group about two months ago.
However, there is still no response that allows the delivery of the formal notification, with an explanation: the Directorate-General for Competition (DG Comp), considers that the terms of the operation constitute a state aid.
Pre-notifications to Brussels are a recurrent method and aim to anticipate and correct possible problems associated with business involving the member states, but as a general rule this process is relatively quick and allows to ensure that the formal notification is already in line with the EU requirements, namely in competition matters.
But the Efacec case is taking longer than expected and, according to a source familiar with the negotiation process between the Portuguese Republic and DG Comp, there is an explanation for this: Brussels considers that the Banco de Fomento financing for Efacec provided for in the deal — $59.7 M (€60 M) in capital and $99.5 M (€100 M) in a 20-year financing line, with a rate of 1.5 % and a grace period of seven years — is not carried out under market conditions, so it constitutes a state aid.
The process, it is a fact, drags on. On the 2 July 2020, the Government nationalized over 71 % of Efacec, while on 24 February of this year, the (new) Government announced a sale agreement to DST. Following that, on the 25 March the formal agreement was signed between the State and the engineering company led by José Teixeira and, finally, in early May, the Government made a “pre-notification” of the operation to the DG Comp, a condition precedent for carrying out the deal. However, the source states, “the negotiations with Brussels could continue for months before formal authorization is granted”.
An official source from the Portuguese Ministry of Finance, contacted by the source, declined to confirm or deny the information, but guarantees that contacts between the Government and DG Comp on Efacec continue.
Considering the lengthy process that has been dragging on for two years, the situation certainly has reflected on Efacec’s operation. According to the figures available to the source, losses have reached $21.4 M (€21.5 M), while the operating result was -$17.9 M (-€18 M).
Source: ECO
#Directorate-General for Competition of the European Commission#DST Group#Efacec#financing#Portugal#sale