State Aid Obligations in due diligence

On 26 May 2015, ACG Holland hosted a lunch meeting kindly hosted by Houthoff Buruma.

Angenita Pex of Houthoff Buruma (pictured top left) introduced the theme of the meeting by explaining that state aid is something often overlooked in due diligence and deal structuring, while the repayment obligations continue to follow the company.  Deal participants may therefore be confronted with them from time to time.

Pieter Rhemrev of PPM Oost (pictured bottom right) gave an overview of the structure of PPM Oost, their recent investments and growth stories. PPM Oost’s invested capital itself has grown from EUR 25.3 million in 2003 to EUR 105.6 million in 2014. He underlined that they always keep the state aid rules in mind, but recognised this is more the concern of the companies receiving their assistance than PPM Oost. Safeguarding of the regulations concerning state aid are part of the fund requirements. PPM Oost companies dare and grow by means of loans between EUR 75k and EUR 2.5 million and minority equity participations of up to EUR 2.5 million. Equity participations are only possible if a third party acts as co investor (matching principle).

Laura Parret of Houthoff Buruma (pictured top right) explained how self assessment of the state aid rules could help companies to verify if certain funding is not deemed to be state aid or at least permitted state aid before accepting funding. There are various regulated types of state aid, which each have their own thresholds and conditions. Moreover, there is the risk of cumulating rules and funding. For due diligence investigations and deal structuring, Laura gave some pointers to inter alia assess the risk that previously granted funding is reclaimed as illegal state aid