ANNOUNCEMENT 29 Nov 2018

In November 2018, the European Investment Bank (EIB) signed a loan agreement with Leonardo S.p.A. to support its helicopter division's product development and research. The loan will be guaranteed by the European Fund for Strategic Investment (EFSI).

NUMBER OF INTERVENTIONS

2

  • 2 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

The European Investment Bank, Financed Projects, LEONARDO R&D: http://www.eib.org/en/projects/loan/loan/20180416
The European Investment Bank, Project summary, LEONARDO R&D: http://www.eib.org/en/projects/pipelines/pipeline/20180416
Leonardo S.p.A.: https://www.leonardocompany.com/en
European Commission (13 January 2015): The Investment Plan for Europe: Questions and Answers: http://europa.eu/rapid/press-release_MEMO-15-3223_en.htm
EIB: European Fund for Strategic Investments - Questions and Answers. Available at: http://www.eib.org/attachments/press/investment_plan_for_europe_qa_en.pdf

Inception date: 29 Nov 2018 | Removal date: open ended

State loan

The loan agreement between the European Investment Bank (EIB) and Leonardo S.p.A. was signed on 29 November 2018. The loan has a total value of approximately EUR 300 million (approx. USD 338.5 million). The loan will support the Italian company's research and development project in its helicopter division. The project mainly aims at integrating new technology; bettering performance and capabilities of its products; as well as developing new products. To a lesser degree, the project also includes investments in ICT, deployment of "Advanced Manufacturing Technology" and bettering the industrial process. 

Leonardo S.p.A. is headquartered in Italy and is a company in the defence, security and aerospace industry. The helicopter division's activities include research, development, design, production and support services of helicopters. According to the company, production covers: "... all the main helicopter weight categories, from the 1.8 tonne single-engine to the 16 tonne three-engine. All the helicopters are dual commercial and military use platforms except some specific military platforms (NH90, Super Lynx 300, AW159 and AW101)." The division has production and assembly plants in Italy, the United Kingdom, the United States and Poland.

A state act in the GTA database is assessed solely in terms of the extent to which its implementation affects foreign commercial interests. On this metric, the investment support granted here is discriminatory.

AFFECTED SECTORS

 

AFFECTED PRODUCTS

 
Inception date: 29 Nov 2018 | Removal date: open ended

Loan guarantee

The EIB's loan to the French dairy cooperative SODIAAL signed on 29 November 2018 was issued under the European Fund for Strategic Investment (EFSI). The loan has a total value of EUR 300 million (approx. USD 338.5 million) and will support the company's research and development project in its helicopter division. Leonardo S.p.A. is headquartered in Italy and is a company in the defence, security and aerospace industry. The helicopter division's activities include research, development, design, production and support services of helicopters. 

The EFSI is a joint initiative by the EIB and the European Commission to promote investment in Europe. The EIB has designated EUR 7.5 billion of its capital for lending to European projects with a higher risk profile than usually taken on by the bank. To compensate for the increased lending risk, the European Commission has agreed to fully guarantee all lending under the EFSI up to a budget of EUR 26 billion. The loan described was issued under the EFSI and thus benefits from a full guarantee through the EU budget.

EFSI support does not fall under EU State Aid rules as it is meant as a tool to address "market failures or sub-optimal investment situations". However, the investment support does include favourable conditions in the form of public assumption of risk.

As described in the European Commission's Fact Sheet from 13 January 2015: "The type of risk-financing instruments will be designed so as to take uncertainty out ("first loss protection") of as such viable projects and therefore crowd-in private sector investments. Since the EFSI will take riskier tranches in investment projects, the private sector will be able to join under more favourable conditions." Furthermore, the EIB states that "The new initiative [i.e. the EFSI] will benefit from the EIB’s strong credit standing that enables funding at favourable conditions and across maturities".