Fund for Supporting the Solvency of Strategic Companies
Royal Law Decree 25/2020, of July 3rd, on urgent measures for supporting the economic recovery and employment set up the Fund for Supporting the Solvency of Strategic Companies. It is a new tool attached to the Ministry of Finance, which is managed by a Managing Council through the state-owned industrial holding company Sociedad Estatal de Participaciones Industriales (SEPI).
The Fund has as its goal to provide temporary state support in order to reinforce the corporate solvency of non-financial companies impaired by the COVID-19 pandemic, which are regarded as strategic for the Spanish or regional economic structure, due to their sensitive social and economic impact, their importance for security, the health of the population, the infrastructures, the communications, or for their role in the adequate operation of the markets, among other reasons.
Providing finance to the deals on account of the Fund is seen as a last resort measure, once it has been verified that the recipient is unable to maintain its operations without public support. The ministerial order published on the Boletín Oficial del Estado (Official Gazette of the Spanish State) on July 24th, establishes the set of requirements which are to be met by those which wish to receive the temporary state support.
The Fund has been initially endowed with 10,000 Million Euros, and it will provide its support through any capital and/or capital hybrid tool. In a supplementary way, it will be able also to provide its support through other credit means.
This Fund is governed by the Ley de Régimen Jurídico del Sector Público (Law on the Legal Regime of the State-Owned Sector), and meets the regulation on state-aid of the European Commission. Specifically, the approval for this mechanism is part of the European framework on the financial support measures for fighting against COVID-19. In fact, on May 8th, the European Commission passed the modification of the Temporary Framework regarding the state-aid measures against the pandemic, in order to include initiatives aimed at the recapitalization of non-financial companies which are in difficulties due to COVID-19.
The deals financed by the Fund will take place after the previous request of the interested company. The capacity for deciding on the requests corresponds to the Managing Council, being required the authorization of the Council of Ministers for the deals being approved.
The deadline for taking a decision will be 6 months after the company submits its request. Once this deadline has elapsed without an express resolution has been issued and notified, it will be understood that the request has been dismissed. The decisions of the Managing Council end the administrative procedure, and against them the only measure open is to submit a judicial review.