Ljubljana, 22 March (STA) - The government has annulled the decision of the previous cabinet to give medical supplies maker Tosama EUR 1.5m in restructuring aid and a further EUR 4m in state guarantees, the Government Communication Office said on Thursday.
Tosama was given the funds on 2 February, with the previous government arguing that the move would help save 400 jobs.
But the decision had outraged Radovan Žerjav, the economic development and technology minister in the new government. He said that the outgoing government was being completely ignorant of the fact that it holds only limited powers.
It was the Ministry of Economic Development and Technology that proposed to the government to annul the aid to Tosama, which has been facing losses, a drop in sales and increasing debt since 2009.
The government said that the company got into trouble primarily because of the extremely high financial liabilities, which are a consequence of a leveraged buyout carried out in 2008.
The ministry has proposed to the government not to grant state aid for bailing out or restructuring companies in which leveraged buyouts were carried out within four years before they applied for state aid.
The aid given by the previous cabinet was conditional on a EUR 1m capital increase that Tosama's majority owner Boštjan Nagode would have to provide alone or through a strategic partner.
The EUR 4m guarantee was meanwhile secured by a lien on Tosama real estate.
Tosama sought state aid after a leveraged buyout by Nagode on 2008 saddled it with a mountain of debt.
Nagode bought the company through his firm Sana investicije with EUR 23m in loans and eventually merged the acquiring company with the acquired company, saddling it with the entire cost of the takeover.