HM Treasury and the Bank of England have this afternoon published information on the Covid Corporate Financing Facility (CCFF) being offered to large companies that make a “material contribution to economic activity in the United Kingdom” and have an acceptable rating or creditworthiness. Further detail will be published on Monday, 23 March. The facility will be a welcome relief to some businesses, but not all: it is only available to companies that were in sound financial health prior to the Covid-19 shock.
In addition to the eligibility requirements, stakeholders will need to consider the impact on any existing financing arrangements. There is, as yet, no mention of legislation being introduced to override any provisions in existing finance documents related to a company’s existing financial indebtedness. Will a company seek a waiver or amendment of any restrictions on incurring further debt? Will stakeholders be able to react in time or will a company access the CCFF notwithstanding such restrictions, assuming existing creditors will be supportive and/or the needs of the business should prevail? In any event, early engagement and stakeholder management will be key.