March 25, 2020 / 3:34 PM / 10 days ago

British companies turn to government's virus-related stimulus

March 25 (Reuters) - A handful of large British companies had emerged on Wednesday as likely candidates for the government’s emergency lending scheme aimed at helping them tide over the coronavirus shutdowns afflicting many of the world’s biggest economies.

The Covid Corporate Financing Facility (CCFF) aims to offset any squeeze on large private sector employers by offering firms with investment grade credit ratings easy access to 12-month loans issued as commercial paper by their banks.

Travel-food company SSP Group, hammered by the virtual shutdown of commercial air travel globally, and student housing operator Unite Group were the latest on Wednesday to signal they were likely to make use of the facility.

Power company Aggreko, as well as bakers Greggs , a mainstay of UK high streets, and property firm NewRiver REIT have already said they expect to qualify.

The first official data on the scheme is due from the Bank of England on Thursday.

“I think a huge number of companies will apply for the scheme,” CMC Markets analyst David Madden said.

“It should provide some much needed support to firms in these challenging times. Let’s hope the process to apply for assistance is easy, and that there is a quick turnaround time too.”

UK firms have been scrambling to deal with the immediate funding pressures caused by the shutdowns, now widespread across the big Asian and western countries in which British companies operate as well as at home.

Dozens of major listed companies have cancelled dividend payments, cut back on investments and pruned other areas of spending, while the government has promised to cover the bulk of wages for most British employees.

But with some dealing with an almost total collapse in revenue amid the lockdowns, their ability to secure even short-term backing from banks and creditors is unclear.

Many of the hardest hit firms have already drawn down all of the credit available to them under existing agreements with banks and only a handful have unveiled deals for additional funds.

Unite, which houses 74,000 students across 177 properties in 27 university towns and cities, said it would withdraw the remaining 150 million pounds from its revolving credit facility, and was exploring CCFF as an option for additional funds if needed.

It expects a significant fall in summer bookings and would also allow any foreign students left stranded by the crisis to stay on free of charge.

SSP, on the other hand, said it was in advanced discussions with HM Treasury and the Bank of England to access the scheme. (Reporting by Muvija M and Tanishaa Nadkar in Bengaluru; Editing by Saumyadeb Chakrabarty)

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