Karl ERJAVEC Minister za zunanje zadeve Republike Slovenije Prešernova cesta 25 SI-1001 Ljubljana Commission européenne, B-1049 Bruxelles – Belgique Europese Commissie, B-1049 Brussel – België Telefon: 00-32 (0) 2 299 11.11. EUROPEAN COMMISSION Brussels, 27.4.2017 C(2017)2627 final PUBLIC VERSION This document is made available for information purposes only. Subject: State Aid SA.37316 (2015/FC) – Slovenia Complaint on alleged unlawful State Aid to T-2 d.o.o. Sir, I. PROCEDURE (1) On 28 August 2013, a complaint 1 was lodged with the Commission alleging that the Republic of Slovenia ("Slovenia") granted unlawful State aid to the Slovenian telecommunications company T-2 d.o.o. ("T-2"). On 11 September 2013, the Commission forwarded a non-confidential version of the complaint to Slovenia. Comments on the complaint were sent on 8 October 2013. (2) The services of the Commission met with the complainant's representatives on 22 January 2014. On 28 January 2014 the Commission wrote to the complainant informing it that Slovenia had stated that no State aid had been provided to T-2 and attaching to its letter a non-confidential version of Slovenia's reply of 8 October 2013. (3) On 13 February 2014, the Commission sent a question list to the Slovenian authorities to which Slovenia replied on 12 March 2014. On 15 April 2014, a non-confidential version of that reply was forwarded to the complainant. The complainant provided additional information on 28 February 2014, which was forwarded for information 1 The complainant asked the Commission not to reveal its identity.
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Karl ERJAVEC
Minister za zunanje zadeve Republike Slovenije
Prešernova cesta 25
SI-1001 Ljubljana Commission européenne, B-1049 Bruxelles – Belgique Europese Commissie, B-1049 Brussel – België Telefon: 00-32 (0) 2 299 11.11.
EUROPEAN COMMISSION
Brussels, 27.4.2017
C(2017)2627 final
PUBLIC VERSION
This document is made available for
information purposes only.
Subject: State Aid SA.37316 (2015/FC) – Slovenia
Complaint on alleged unlawful State Aid to T-2 d.o.o.
Sir,
I. PROCEDURE
(1) On 28 August 2013, a complaint1 was lodged with the Commission alleging that the
Republic of Slovenia ("Slovenia") granted unlawful State aid to the Slovenian
telecommunications company T-2 d.o.o. ("T-2"). On 11 September 2013, the
Commission forwarded a non-confidential version of the complaint to Slovenia.
Comments on the complaint were sent on 8 October 2013.
(2) The services of the Commission met with the complainant's representatives on 22
January 2014. On 28 January 2014 the Commission wrote to the complainant
informing it that Slovenia had stated that no State aid had been provided to T-2 and
attaching to its letter a non-confidential version of Slovenia's reply of 8 October 2013.
(3) On 13 February 2014, the Commission sent a question list to the Slovenian authorities
to which Slovenia replied on 12 March 2014. On 15 April 2014, a non-confidential
version of that reply was forwarded to the complainant. The complainant provided
additional information on 28 February 2014, which was forwarded for information
1 The complainant asked the Commission not to reveal its identity.
2
purposes to the Slovenian authorities on 2 April 2014. On 19 May 2014 and 20 June
2014, the Commission received new written submissions from the complainant.
(4) On the basis of an initial examination and review of documents and information made
available, the Commission sent a first preliminary assessment letter to the
complainant on 1 July 2014 stating that the measure objected to a priori did not
appear to constitute State aid within the meaning of Article 107(1) of the Treaty of
the Functioning of the European Union ("TFEU").
(5) The complainant rejected that conclusion by letter dated 1 August 2014. The
Commission services met again with the complainant's representatives on 10
December 2014.
(6) On 15 January 2015, the Commission sent a second preliminary assessment letter
repeating that the measures did not appear to constitute State aid. The complainant
responded on 13 February 2015 and rejected the Commission's preliminary
conclusion2.
(7) The complainant sent additional correspondence on 29 October 2015 and the
Commission met with the complainant on 26 January 2016.
(8) At the request of the Commission, the Slovenian authorities provided additional
information on 9 August 2016 and 17 August 2016. The complainant updated the
Commission in respect of recent developments (in particular on the Slovenian
telecommunications market) during a teleconference on 22 November 2016.
(9) By letter dated 7 March 2017, Slovenia exceptionally agreed to waive its rights
deriving from Article 342 of the Treaty on the Functioning of the European Union
("TFEU") in conjunction with Article 3 of Regulation 1/19583 and to have the present
decision adopted in English.
II. BACKGROUND
1. The alleged beneficiary
(10) T-2 is a Slovenian company providing telecommunications services in Slovenia. The
company was established in 2004 by Zvon ena Holding, an investment fund
controlled by Gospodarstvo rast d.o.o., and started to provide telecommunications
services on 1 October 2005. According to its own figures, T-2 captured a 6% market
share in broadband access, a 2% market share in the fixed telephony segment and a
3% market share in cable television in its first year of service.
(11) T-2's shareholder structure frequently changed between 2006-2011, as T-2 was
recapitalised a number of times over that period. In 2006, Zvon ena Holding owned
2 In that letter, the company also suggested that there also seemed to be a tax measure in favour of T-2 By
e-mail of 22 November 2016, the complainant clarified the scope of his complaint saying that "[t]he issue
on taxes, however, should not be subject to the Commission’s decision, but should moreover serve as sole
background information" . 3 Regulation No 1 determining the languages to be used by the European Economic Community, OJ 17,
6.10.1958, p. 385
3
51%, while Gosposdarstvo rast owned 42%, the remainder being held by other
investors. In 2011 (immediately prior to the compulsory settlement which is described
in recitals (21) to (26)), Zvon ena Holding owned 95.19%4 of T-2.
2. The alleged State aid measures
(12) The complainant claims that T-2 received State aid under the following three
different forms:
(a) part of a loan5 to T-2 at preferential conditions by the "Syndicate Banks"
(which are described in more detail in recital (13)) provided on 16 April 2007
(“the T-2 loan”);
(b) ineffective debt recovery, as the Syndicate Banks showed a lack of
willingness to recover the debt from T-2 once it became apparent that T-2
would have difficulties repaying the loan; on 16 February 2012, in the
framework of a compulsory settlement procedure, T-2's debt6 was written
down to 44% of its initial nominal value (“the compulsory settlement
procedure”); and
(c) a number of loans by certain banks among the Syndicate Banks to certain T-2
shareholders (to support T-2) at preferential conditions, hence indirectly
benefitting T-2, provided on several dates (“the loans to T-2's
shareholders”).
(13) The following banks participated in the consortium of banks that allegedly provided
preferential treatment to T-2 ("Syndicate Banks"):
Nova Ljubljanska banka d.d. ("NLB") is a joint stock company and the lead
bank within the Syndicate Banks. On 31 December 2006, Slovenia held 45.47%7
of the share capital of NLB (35.41% directly and 5.05% and 5.01% indirectly via
two 100% State owned companies KAD8 and SOD9), while the other strategic
shareholder - the Belgian listed bank KBC - held 34%. In 2008, the respective
stakes of Slovenia and KBC dropped marginally to 43.16% and 30.57% - the
shareholding structure did not change until March 2011. At that point, Slovenia
4 Smaller stakes were held by Finetol, Krekova Druzba Za Storitve and I.J. Storitve In previous years, also
Zvon dva Holding – a company related to Zvon ena Holding - was a shareholder of T-2; both companies
were owned by the Maribor Archdiocesan. 5 The total loan amounted to EUR 120 million, of which EUR 108 million was provided by Syndicated
Banks which according to the complainant were controlled by the Slovenian State. The remainder of the
loan (i.e. EUR 12 million) was provided by privately-owned Hypo Alpe-Adria-Bank.
6 Also the loan of the Syndicated banks was impacted by the compulsory settlement procedure for the part
of the loan (i.e. EUR 69.7 million) which was deemed to exceed the value of the collateral.
7 All figures related to shareholder structures in this recital are taken from the respective annual reports.
8 Kapitalska druzba pokojninskega in invalidskega zavarovanja, dd. ("KAD") is a joint stock company
whose sole shareholder is Slovenia. KAD manages state pension funds and assets for Slovenia. It is also
responsible for the privatisation of state owned assets. 9 Slovenska odskodninska druzba d.d. ("SOD") is a 100% State owned company.
4
subscribed to a capital increase of EUR 250 million10, which resulted in an
increase of Slovenia's stake to 53.72%11. After the capital increase, KBC's stake
dropped to 25%. In 2002, the European Bank for Reconstruction and
Development (EBRD) acquired a 5% shareholding which it sold in 2008.
Nova Kreditna Banka Maribor d.d. ("NKBM") is a joint stock company which
at the end of 2006 had the following shareholder structure: Slovenia 90.41%,
KAD 4.79% and SOD 4.79%. NKBM has been listed on the stock market since
10 December 2007. Slovenia (directly and indirectly via KAD and SOD) held just
over 51% of the share capital of NKBM between 2007 - 2011. Other shares were
in the hands of retail and institutional investors (both domestic and
international12).
NLB Banka Domzale d.d. and NLB Banka Zasavje d.d. are joint stock
companies, which were both originally wholly-owned subsidiaries of NLB before
they merged with NLB in 2008;
LHB Aktiengesellschaft ("LHB AG") is a joint stock company in which NLB
owned an 81.02% stake in 2007. In 2009, NLB became the 100% owner of the
company;
Banka Celje d.d (merged with Abanka in 2015) is a joint stock company, in
which NLB held a 40.99% stake of the share capital in the period 2007 – 201313.
Over the same period, Slovenia had a direct holding of 9.36% of Banka Celje's
share capital.
Hypo Alpe-Adria-Bank d.d. is a privately owned bank where neither the
Slovenian State nor NLB are present in the ownership structure.
i. The T-2 loan
(14) The loan agreement between the Syndicate Banks and T-2 is dated 16 April 2007.
The purpose of the EUR 120 million loan to T-2 was mainly to finance the
construction of a fixed Very-high-bit-rate Digital Subscriber Line (VDSL) optical
network, and a mobile UMTS/IMT-2000 network.
10
This capital increase was approved as rescue aid by Commission Decision of 7 March 2011 on State aid
SA.32261, OJ C 189, 29.06.2011, p.2 and as restructuring aid by Commission Decision of 18 December
2013 on State aid SA.33229, OJ L 246, 21.08.2014, p.28. 11
45.62% directly and 4.07% and 4.03% via KAD and SOD. 12
The 2007 annual report mentioned that Citigroup Global Markets Ltd held 2.71%, Julius Baer
International Equity Fund 1.13% and East Capital Balkan Fund 0.89%. 13
NKBM also acquired a 2.67% stake in 2010.
5
(15) Table 1 illustrates the amount lent to T-2 via the Syndicate Banks and the respective
percentages:
Table 1 Actual amount
(EUR Millions)
% of the total
loan
NLB 50 41.67%
NKBM 20 16.66%
LHB 20 16.66%
Hypo Alpe-Adria-Bank 12 10.00%
Banka Celje 8 6.67%
NLB Banka Domžale 5 4.17%
NLB Banka Zasavje 5 4.17%
TOTAL 120 100.00%
(16) The loan agreement provides that NLB should act as the Organiser and Agent on
behalf of the Syndicate Banks. In accordance with the loan agreement, the Syndicate
Banks had equal status to NLB in respect of exercising their rights. In line with
common market practice, the role of Agent did not include the power to determine the
pricing and conditions of the loan on behalf of the other banks within the Syndicate
Banks.
(17) The loan conditions at the start of the loan provided that T-2 had to pay an interest
rate on the loan of 6 month Euribor14 + 1.15%15.
(18) Under the terms of the loan agreement, T-2 committed to repay the loan in 14 bi-
annual instalments of EUR 8,571,428.57. The loan agreement included a 24-month
moratorium which started on the date the loan was signed. The first instalment
payment date was 1 November 2009 and the last 1 May 2016.
(19) At the end of April 2009, interest on the loan became payable. However, T-2 asked
to defer the payment of interest and to restructure the entire loan. The Syndicate
Banks agreed to this request. The maturity of the first payment of the loan was
deferred to 5 March 2010 and the final payment instalment date was extended to 2
November 2016. The interest margin was increased from 1.15% to a basic margin of
3.5% per annum.
(20) The loan agreement provided that the collateral in respect of the loan includes 20
blank bills of exchange, establishment of liens on the existing networks, an
uninterrupted series of contracts on the establishment of property rights in connection
with the network and liens on the monies on T-2's account (or receivables due from
the bank) which arise from the funds on T-2's account. The loan agreement also
provided that every 31 March and 30 September in the year, T-2 had to create a lien
14
Euro Interbank Offered Rate. 15 Following receipt of the T-2's 2008 accounting statements, the interest margin was to be adjusted in
accordance with the ratio of net debt (where subordinated shareholder loans are not included in net debt)
to EBITDA (Value R), as follows: ratio R below 3: 1% margin; ratio R between 3 and 4: 1.15% margin;
ratio R between 4 and 6 1.35% margin; ratio R above 7 -1.70% margin.
6
in favour of the Syndicate Banks on the New Network16. For that purpose, a detailed
framework contract on how to pledge immovable and movable property was agreed
upon as Annex VI of the loan agreement.
ii. The compulsory settlement procedure
(21) On 17 September 2010, Telekom Slovenije d.d, a State-controlled
telecommunications company, and creditor and competitor of T-2, filed a request to
initiate bankruptcy proceedings17 against T-218.
(22) However, on 30 December 2010, T-2 filed a proposal for preliminary bankruptcy
proceedings to be interrupted, so that compulsory settlement proceedings could be
initiated19. T-2 pursued compulsory settlement to avoid bankruptcy proceedings and
to persuade its creditors to agree to a restructuring of its debts. The District Court in
Maribor accepted T-2's proposal, hence compulsory settlement proceedings were
instigated on 13 January 2011.
(23) In order to progress with compulsory settlement proceedings, T-2 as a debtor had to
prepare a Financial Restructuring Plan (FRP) pursuant to Article 145 of the Slovenian
Financial Operations, Insolvency Proceedings and Compulsory Dissolution Act
("ZFPPIPP"). In April 2011, T-2 presented an amended Financial Restructuring Plan
("aFRP")20. The aFRP21 differed from the initial FRP, as a number of secured creditors
such as the Syndicate Banks were no longer considered to be secured in full. Part of
their claim was indeed considered to be unsecured. As part of the aFRP, T-2 proposed
to its unsecured creditors that:
16
In the definition chapter of the loan agreement, "New Networks" are defined as "all movable and
immovable property and rights and investments in construction … representing each respective a
complete functional whole of the Network, financed by the loan in whole or in part … A part of the
Network is considered to become a functional unit when the Subscribers or Network Lessees are able to
use that part of the Network."
17 This procedure is where the debtor or creditor files a petition to declare that a person or business is
insolvent. If a compulsory petition is filed, the court can order the compulsory administration of a
bankrupt's affairs so that his assets can be fairly distributed among his creditors. 18
T-2 allegedly owed Telekom Slovenije more than EUR 12 million (EUR 10.4 million directly and EUR
2.5 million via its subsidiary Mobitel). 19
To ensure the progression of compulsory settlement proceedings, the debtor must disclose its financial
position to creditors– this includes a financial restructuring plan ("FRP") which is certified by an
independent business valuer. The role of the business valuer is to assess whether the compulsory
settlement proposed by the debtor will guarantee creditors more favourable conditions for the payment of
claims when compared to bankruptcy proceedings. During the compulsory settlement proceedings itself,
the creditors decide on whether the compulsory settlement should be adopted by issuing votes. A
compulsory settlement will be adopted if it is voted for by creditors representing more than 60% of all
weighted claims by creditors with voting rights. 20
Banka Celje appealed against the order allowing the aFRP but on 7 July 2011, the Higher Court of
Ljubljana concluded that Banka Celje's appeal was unfounded.
21 In its aFRP, T-2 forecasted sales to grow by an annual average growth rate of 10.7 % in the period 2010-
2020 and it assumes that it will gradually – by 2020 – achieve a 33.8% EBITDA-margin. Macro-
economically, following negative GDP growth of -8.1% in 2009, Slovenia was expected to show positive
growth of 1.2%, 1.9% and 2.5% in respectively 2010, 2011 and 2012 (source: