State aid: Commission approves €145 million Hungarian recapitalisation scheme to support companies affected by coronavirus outbreak

The European Commission has approved an approximately €145 million (HUF 50 billion) scheme to provide liquidity and capital support to companies affected by the coronavirus outbreak. The scheme was approved under the State aid Temporary Framework. The support will take the form of (i) debt instruments in the form of subordinated loans; (ii) equity instruments in the form of recapitalisations; and (iii) convertible loans (hybrid instruments). The scheme will be managed by two state Funds managed by Hiventures Zrt and, in order to ensure their return on the investments, the Funds will become shareholders in all beneficiaries. This means that the recapitalisation will be a mandatory component of aid, whereas it will be possible to combine it with debt and/or hybrid instruments. This will also provide each beneficiary with a balanced support, which can include both equity and debt, thus avoiding distorting the company’s financial position. The Commission found that the scheme notified by Hungary is in line with the conditions set out in the Temporary Framework. This includes the obligation for beneficiaries that are large enterprises  to publish information on the use of the aid received, including on how this aid supports the company’s activities in line with EU and national obligations linked to the green and digital transformation. The Commission concluded that the measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework. On this basis, the Commission approved the measure under EU State aid rules. The non-confidential version of the decision will be made available under the case number SA.58420 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved.