Biggest Beneficiary of U.K. Virus Aid Plan Is German Chemicals

(Bloomberg) --

Germany’s BASF SE was named as the biggest recipient of emergency funding from a 16.2 billion-pound ($20 billion) Bank of England program designed to help the biggest companies in the U.K. weather the coronavirus pandemic.

The chemicals giant received 1 billion pounds, the maximum allowed by the BOE’s Covid Corporate Financing Facility, the central bank said in a statement Thursday. Other big borrowers include Bayer AG, the maker of Roundup weedkiller, and a unit of U.S. oil services company Baker Hughes.

The program, designed to help firms making what the government calls a “material contribution” to the U.K., is providing more money to firms controlled outside the country than to their domestic counterparts, the figures show.

That may stir controversy over whether the U.K. is imposing strict enough conditions on companies seeking state help. German aid rules prevent borrowers from paying dividends, while British Chancellor of the Exchequer Rishi Sunak has only asked them to exercise “restraint” on dividends and senior pay.

BASF said in April it wouldn’t draw on help available from Germany’s development bank. It still intends to increase its annual dividend, which last year cost almost 3 billion euros ($3.4 billion). A spokesman said the company has eight production sites and 834 employees in the U.K. as of December.

“These operations benefit the U.K. by providing employment; significant sales inside and outside the U.K.; investment in innovation and R&D in universities and institutions,” the company said in a statement.

Bayer spokesman Tino Andresen said the company had 880 full-time employees in the U.K. at the end of last year and generated 1 billion pounds of revenue in the country.

Perfume-maker Chanel, soccer club Tottenham Hotspur, Nissan Motor Co., backhoe maker JCB and cruise operator Carnival Plc also used the program. Tottenham Hotspur said in a statement it wouldn’t use the funds for player acquisitions. Officials at Chanel couldn’t immediately comment.

The biggest recipients
BusinessAmount (millions of pounds)
BASF SE1000
Baker Hughes UK Funding Company PLC600
Bayer AG600
Chanel Ltd.600
CNH Industrial NV600
Compass Group PLC600
Easyjet PLC600
Intercontinental Hotels Group600
J.C.B. Service600
Nissan Motor Co., Ltd.600
Rentokil Initial plc600

Thursday marks the first time the BOE has identified the companies that used the program, although some had announced the information themselves. They include Ryanair Holdings Plc, EasyJet Plc and International Consolidated Airlines Group, the parent of British Airways.

Under the CCFF program, the BOE purchases commercial paper with a maturity of up to a year issued by large firms. The government’s loan programs for smaller companies have paid out a combined total of more than 30 billion pounds.

©2020 Bloomberg L.P.

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