Slovenia earmarked EUR 1m for a loan and guarantee to the company and converted claims to capital, while a new loan and extension of guarantees is also planned.

The Slovenian Economic Development and Technology Ministry said on Friday that the Commission found the measures and the restructuring programme was in line with rules on state aid and refinancing of troubled non-financial companies.

The decision also means that the recapitalisation during the court-mandated debt restructuring was in line with EU rules and that the Commission believes Pozela has a chance of a long-term survival.

According to the ministry, the restructuring programme is based on the well-known Polzela trademark, know-how, and experience.

"The company got a chance for survival and for the conclusion of the restructuring as well as to start growing and developing," Minister Zdravko Počivalšek told the press in Brussels, where he attended a session of EU trade ministers.

In late 2014 the government approved a EUR 500,000 short-term loan and a EUR 500,000 guarantee for the loan from the Delavska hranilnica bank. A few months later, in early 2015, it converted a total of EUR 923,000 into capital under the court-mandated restructuring.

After the restructuring, the country's bad bank got a 37.7% stake in Polzela, the state a 30.4% stake, the Deželna banka Slovenije a 13.4% stake, bank NKBM a 10.2% stake and bank Hranilnica Lon a 6.9% stake.

The ministry also said that the restructuring programme approved by the Commission envisages that the 2014 guarantee agreement be extended by seven years and that a new loan of EUR 800,000 be approved.

The restructuring is to be finalised by the end of 2017.