(142) On the basis of the foregoing assessment, the Commission concludes that the City did not behave as a market creditor as it granted the capital loan (by way of conversion of liabilities) on terms which did not comply with market conditions. Consequently, the 2005 capital loan conferred an undue economic advantage on HelB.
9.2.3.
Conclusion on the existence of State aid
(143) In the light of the above, the Commission concludes that Measure 2 constitutes State aid within the meaning of Article 107(1) TFEU. The aid amounts to a difference between:
(1) the interest due calculated on the basis of the market-conform interest rate, that is to say (a) 8,08 % on the ‘set-up loan’ between 1 January 2005 and 11 December 2015; and (b) 7,70 % on the liability of STA between 18 April 2006 and 11 December 2015 (31); and
(2) the interest actually paid, that is to say 0.
The aid thus calculated amounts to EUR 20 241 255 (see Annex). The granting date of the aid is the date when the interest would have been due had the loan been granted on market terms, i.e. 31 December of each year between 2005 and 2014 and 11 December 2015 (the day when the 2005 capital loan was converted into equity of HelB). (32)
9.3.
Measure 3 – 2011 capital loan to HelB
9.3.1.
State resources and imputability, selectivity, effect on competition and trade between Member States
(144) The conclusion concerning State resources and imputability (see recital (85)), selectivity (see recital (86)), effect on competition and trade between Member States (see recital (117)) made with respect to Measure 1 applies accordingly to the present measure.
9.3.2.
Existence of an economic advantage
(145) As a preliminary remark, the 2011 capital loan was granted on the same terms as the 2005 capital loan, in particular 6 % interest rate, no collateral, repayment conditional on the availability of sufficient profits, subordination to all other debts and unlimited duration. Therefore, like the 2005 capital loan, the 2011 capital loan should be treated as a quasi-equity instrument. Finland itself calls Measure 3 ‘a capital injection’ and acknowledges that it was an equity instrument. Unlike the 2005 capital loan, however, the 2011 capital loan was not a result of the conversion of existing liabilities but a fresh equity investment.
(146) A rational market investor considering making an equity investment would have first conducted an investment appraisal analysis to assess whether the expected rate of return from such an investment is higher than the investor’s required rate of return taking into account all relevant risks. A required rate of return in the present case can be defined as a minimum rate of return that a market investor would have sought to generate in order to undertake the investment. Typical methods used in investment appraisal include, for example net present value (NPV) or internal rate of return (IRR). A rational market operator would have undertaken an investment if its IRR was greater than the required rate of return or if its NPV was greater than 0.
(147) The City had not performed any investment appraisal, nor any other type of
ex ante
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