Spain Approves 11 Billion-Euro Package to Help Indebted Firms
(Bloomberg) -- Spain’s government approved an 11 billion-euro ($13 billion) plan to help companies pay down debts accumulated during the pandemic, Economy Minister Nadia Calvino said.
The package, which has three parts, will leave companies better poised for the economic recovery, Calvino told journalists during a televised news conference on Friday.
The announcement is the latest example of how European governments are accelerating plans to prevent defaults and corporate bankruptcies as businesses struggle to survive extended pandemic restrictions.
Under the plan, the central government in Madrid will channel 7 billion euros in cash transfers to regional authorities, which will then distribute the aid to companies based on how much their revenue has dropped, among other factors. One billion euros will be allocated to a separate restructuring and recapitalization fund.
The government of Socialist Prime Minister Pedro Sanchez has also pledged 3 billion euros to cover potential debt restructuring for firms that have tapped the country’s state-backed loan guarantee program.
Spanish companies have borrowed more than 120 billion euros in state-backed loans since authorities launched the plan a year ago to help them stay afloat during the crisis.
Banks will design the restructuring plans with the firms, and the state will assume its share of a “haircut,” for instance, or other forms of debt relief.
©2021 Bloomberg L.P.