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COVID-19 Corporate Financing Facility: £18.8 billion of public funding provided to over 50 businesses including Tottenham Hotspur, Ryanair and Rolls Royce

10 June 2020

On 4th June 2020, the Bank of England published details of the awards it has made using the COVID-19 Corporate Financing Facility ("CCFF").  Since March 2020, over £18 billion of short term liquidity support has been provided to large, investment grade businesses, many of which are household names. The announcement of the awards is likely to increase the pressure on the UK Government to extend the CCFF to other businesses.

The CCFF was launched in March 2020 by the UK Government alongside a £330 billion package of support measures designed to protect businesses and the economy during the COVID-19 crisis.

Run by the Bank of England, the CCFF is aimed at supporting the UK's biggest companies, specifically those with a strong enough credit rating to sell a short-term commercial paper (a time limited debt instrument) to the Bank of England. So far, the Bank of England has purchased commercial papers relating to 55 businesses, thereby providing much needed liquidy during a time of economic hardship. Beneficiaries of the CCFF include  Ryanair (£600m), Toyota (£365m), John Lewis (£300m), Rolls Royce (£300m) and British Airways (£300m). 

What is the CCFF?

Under the CCFF, the Bank of England will purchase short-term debt from companies considered to make a material contribution to the UK economy and which were in sound financial health prior to the COVID-19 pandemic. 

The facility offers financing on terms comparable to those prevailing in markets in the period before the Covid-19 economic shock. The minimum size of an individual security that the Bank of England will purchase from an individual participant under the CCFF is £1 million. 

The CCFF is delivered through participant commercial lenders and backed by the Bank of England.  It was originally planned that CCFF would operate for 12 months, but the Government is likely to run the fund for as long as necessary to relieve cash flow pressures for strategically important firms. 

High profile recipients of CCFF support

On 4 June 2020, Tottenham Hotspur Stadium Ltd confirmed that it has secured a £175million loan from the Bank of England under CCFF scheme, with the club estimating revenue losses of £200m due to the pandemic. The club has reportedly confirmed that the facility, which is due to be repaid in April 2021 at 0.5% interest, "will not be used for player acquisitions", but would ensure it has "financial flexibility and additional working capital during these challenging times".

Ryanair has reportedly received £600m, weeks after CEO Michael O'Leary stated his intention to challenge awards of State aid in the aviation industry.  However, the premise with CCFF appears to be that it is a commercial investment by the State rather than any sort of subsidy.

Public funding during the Covid-19 pandemic

The Government's decision to publish details of the awards will surely increase pressure to provide public funding to other businesses. 

The CCFF award to a Premier League football club raises questions about public funding being provided to sports clubs. Although the Government has resisted calls to provide State aid to professional sports clubs, the UK Government did recently authorise a bailout package to the Rugby Football League.  At the time, the Minister sought to differentiate the situation with Rugby League arguing the assistance was provided in order to safeguard the immediate future of the sport, which has suffered extreme financial hardship as a result of social distancing measures.  

There have also been a number of public interventions to support the aviation sector, which has suffered an almost total interruption to services due to the pandemic.  Again, the Government has been eager to avoid intervening across the sector, preferring to make bespoke awards.  

In addition to the support provided under the CCFF, the UK Government has recently announced a rescue plan named "Project Birch", under which public funding would be made available to strategically important, large companies "in exceptional circumstances" where its failure would "disproportionately harm the UK economy". Reports state that the Government is planning to offer preferential loans or take equity in strategically important companies, but only as a "last resort", where options such as the CCFF have been exhausted. 

For further information on how Governments can support businesses during the COVID-19 pandemic, please contact a member of our specialist Public Sector funding team.

DWF Law LLP has a considerable depth of expertise in public funding, including State aid law. We are able to draw upon a team of leading experts, in our UK, Brussels and other international offices, who have extensive experience in this area, including working within the UK Government on high profile funding matters, defending projects from recovery and designing projects to meet the rules.