Brazilian company Rio Nave has backed out of the privatisation process of Portuguese shipyard company Estaleiros Navais de Viana do Castelo (ENVC) due to an investigation by the European Commission into possible illegal funding of the Portuguese company by the State, the Portuguese press reported.

Russian group RSI Trading which, now that Rio Nave is no longer interested, is now the only candidate for acquisition of ENVC, announced Monday that it had decided to leave its proposal to buy the shipyard on the table for another month, although it had admitted it was concerned about the “deterioration” of the company.

The European Commission is investigating loans and capital increases from the Portuguese government for the state company, and the crux of the investigation is the possibility that the terms of the concession were so favourable for ENVC that no private company could have offered similar terms, which violates EU competition laws.

According to the Portuguese press, Rio Nave decided “not to maintain” it proposal to acquire ENVC due to the uncertainties facing the operation, although the Portuguese government has sent a team from the Finance Ministry and the Ministry of Defence to request that the process move ahead as quickly as possible.

Rio Nave, which is controlled by the Estai group, is a ship building company from Rio de Janeiro. (macauhub)