Womble Bond Dickinson is advising a number of clients in connection with access to the funding provided by HM Treasury and the Bank of England pursuant to the COVID Corporate Financing Facility (the "CCFF"). This facility is designed to support liquidity among larger corporates, helping them to bridge coronavirus disruption to their cash flows through the purchase of short-term debt in the form of commercial paper. Commercial paper is an unsecured, short term debt instrument issued by a company. In summary, the facility works by allowing eligible non-financial companies to sell commercial paper to the CCFF.
Accessing the CCFF
The scheme is being administered through the banks and the documentation necessary to establish a suitable programme is relatively standardised. The banks currently participating in the CCFF (and relevant contact details) are listed here. The use of simplified standard documentation means that the CCFF can be accessed relatively quickly by companies who have not previously issued commercial paper. In most cases the two key aspects for a company to consider before commencing an application are (i) whether they are eligible and (ii) what consents might be required under any other financing facilities currently held by the company.
Who is eligible?
To be eligible a company must be one which makes a material contribution to the UK economy. This will include UK incorporated companies, including those with foreign-incorporated parents and with a genuine business in the UK; companies with significant employment in the UK; firms with their headquarters in the UK. The Bank of England will also consider whether the company generates significant revenues in the UK, serves a large number of customers in the UK or has a number of operating sites in the UK. In addition, the CCFF is only open to those companies that can demonstrate that they were in sound financial health prior to 1 March 2020. This is interpreted as meaning that companies had a short or long-term credit rating of investment grade at that date. If a company does not have a credit rating, this does not mean they cannot access the CCFF and the advice is for the relevant company to contact their bank in the first instance because if the relevant bank views the company as being investment grade (even though it does not have a formal rating) then the Bank of England will consider making an assessment of whether the company can be deemed as equivalent. Another option is to get in touch with one of the credit rating agencies to seek an assessment of credit quality in a form which can be shared with the Bank of England (e.g. an indicative rating (Moody's), a credit assessment (S&P) or a credit opinion (Fitch). The Bank of England has been liaising with the Rating Agencies as to its requirements.
If you would like to discuss the details of the CCFF in more detail, need help to determine whether the scheme might be suitable for you or need assistance in preparing an application or documentation then please do not hesitate to get in touch.