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State aid: EU Commission approves €40 million rescue aid to Croatian mechanical engineering company Ðuro Ðaković

The European Commission has approved, under EU State aid rules, Croatia’s decision to grant mechanical engineering company Ðuro Ðaković a State guarantee for a €40.31 million (HRK 300 million) loan.

The measure will allow the company to meet urgent liquidity needs and continue its activities, without unduly distorting competition in the Single Market. Ðuro Ðaković’s financial difficulties pre-date the COVID-19 outbreak and the support measure was approved under the Commission’s Guidelines on rescue and restructuring.

On 20 March 2020, Croatia notified the Commission of its decision to grant a State guarantee on an approximately €40 million (HRK 300 million) loan in favour of Đuro Đaković d.d. (“Đuro Đaković”).

Đuro Đaković is facing difficulties due to internal and external factors, to a large part related to the cutbacks in national military spending in the last few years. In the present case, the Commission found that the State guarantee is necessary to allow Đuro Đaković to continue production, deliver on contracts already entered into and avoid layoffs in a structurally disadvantaged area.

Moreover, the company’s liquidity needs over the six next months are based on reasonable assumptions. Finally, Croatia committed to provide a restructuring plan for Đuro Đaković within six months following the first disbursement of the guaranteed funds. The Commission therefore concluded that the measure is compatible with EU State aid rules.

Arianna Podesta –