Tackling COVID-19: Policy Responses Concerning Soes and Related Rescue Operations

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Tackling COVID-19: Policy Responses Concerning SOEs and Related Rescue Operations

13 January 2021

This brief provides an overview of some corporate governance and capital markets-related measures that jurisdictions have taken in response to the economic crisis caused by the COVID-19 outbreak. Many countries continue to consider adjustments of policies and regulations as circumstances evolve. The information in this compilation gives examples of how issues are being addressed in different legal contexts.

This document was discussed at the Working Party’s video meeting on 26-27 October 2020. More information about the series is available at: www.oecd.org/corporate/soes. Any questions and comments are welcome and should be addressed to: Mr. Hans Christiansen Senior Economist Corporate Governance and Corporate Finance Division Directorate for Financial and Enterprise Affairs, OECD [Tel: +33 1 45 24 88 17 [[email protected]]

TACKLING COVID-19: POLICY RESPONSES CONCERNING SOES AND RELATED RESCUE OPERATIONS 2  ACTION TO OFFER EQUITY OR OTHER BALANCE SHEET SUPPORT TO PRIVATE FIRMS

About this document

This document provides a stock-taking of national measures to strengthen the balance sheets of corporations in the context of the current COVID-19 induced crisis. It contains three tables, the first of which takes stock of action taken by governments vis-à-vis individual firms in the private sector. The second table details recapitalisation and other measures to strengthen the balance sheet of existent state owned or state controlled companies. The third table takes stock of economy wide or sectorial programmes to strengthen the balance sheets of the corporate sector. In keeping with the Working Party’s mandate the main focus of the information provided is identifying transactions that will, or could potentially, increase equity holdings by the national governments.

Importantly, a number of limitations are imposed on the data set:

 The tables include transactions with a direct impact on corporate balance sheets, such as equity injections; state loans and loan guarantees; and direct subsidies. They do not include macro economic measures such as fiscal and monetary stimulus, and they do not include indirect corporate support such as incentives to end-consumers to purchase companies’ products.  The tables do not include support measures targeted directly at small and medium-sized enterprises and self-employed persons.  The tables include only transactions of “significant” size. In the case of support to individual companies (Tables 1 and 2) this implies transactions exceeding US$ 50 million. Industry and economy-wide measures exceeding US$ 1 billion are included in Table 3.  The jurisdictional coverage has been limited to OECD members plus invitees/participants in the WP SOPP.  The separation between state controlled and private companies is based on a case-by-case assessment. Where the state owns a large minority stake in a company, the company is reported in table 2 if there are no other large block-holders in the company and in table 1 if the shareholders also include large private sector investors. Companies with significant shareholdings from foreign governments are included in table 2.

The tables were initially compiled by the Secretariat based on press reports and information provided by government and companies via internet pages. They have been reviewed by the participants in the Working Party’s two COVID-19 related video conferences in April and September 2020 and updated reflecting reactions by the delegates. Following its meeting on 26-27 October 2020 the Working Party agreed to derestrict the document.

TACKLING COVID-19: POLICY RESPONSES CONCERNING SOES AND RELATED RESCUE OPERATIONS ACTION TO OFFER EQUITY OR OTHER BALANCE SHEET SUPPORT TO PRIVATE FIRMS  3

Table 1 - Action to offer equity or other balance sheet support to private firms

Country Industry Nature of the Status of Description Source (add link) support/measure implementation ______(1) Full or partial takeover (1) Action taken (2) Action that can lead to (2) Actively takeover considered (3) Loans or guarantees; (3) Action (4) other possible/speculated Brazil Airline and (3) or (4) (3) The Brazilian development bank (BNDES) has been negotiating with https://www.reuters.com/article/us- manufacturing airlines and plane maker Embraer for a rescue package that may reach $2.5 health-coronavirus-brazil- Azul billion. This is because private lenders have been resisting extending loans bailouts/embraer-brazil-airlines-hire- LATAM to airlines, an industry in which their current exposure is small, according advisers-to-discuss-government- Gol two sources. support-sources-idUSKBN22I2TP Embraer BNDES’s support package to airlines will mix credit lines with convertible https://www.reuters.com/article/us- instruments that could potentially give the bank a stake in the companies. embraer-management/embraer- secures-600-mln-loan-as- In mid-June, Embraer secured a loan of up to $300 million with a syndicate commercial-aviation-chief-departs- of banks, and BNDES backed half of the total amount. BNDES, in this idUSKBN23M1QB operation, did not require any equity stake or convertible instrument. Colombia Airline (3) (1) Avianca, the flag carrier of Colombia, received a confirmation from the https://www.reuters.com/article/us- Avianca country’s government on 29 August that it would receive a $370M loan from avianca-colombia/colombian- a disaster fund. Avianca Holdings filed for bankruptcy protection back in government-to-lend-struggling- May (read more here) and was seeking more than a billion USD from the avianca-up-to-370-million- government. However, the move is not without controversy as Avianca, idUSKBN25P0S1 branded as a Colombian airline, is domiciled legally in Panamá. Czech Airline (1) or (2) (3) The Minister of Industry Karel Havlicek suggested in May that one way in https://news.trust.org Republic Smartwings which the country could help the airline is by entering its ownership structure /item/20200518124053-uj6r3/ “up to 100%”. Finance Minister Alena Schillerova also backed this proposal. Smartwings (which owns Czech Airlines) employ 2,500 people in the Czech Republic and have been deemed an organization of strategic importance by their country’s government. The company, on the other hand, has publicly announced that it is seeking state loans or guarantees, but has no interest in opening the way for the Czech government to take up to 100% control.

TACKLING COVID-19: POLICY RESPONSES CONCERNING SOES AND RELATED RESCUE OPERATIONS 4  ACTION TO OFFER EQUITY OR OTHER BALANCE SHEET SUPPORT TO PRIVATE FIRMS

Subsidiaries Austrian Airlines, Swiss and Brussels Airlines are negotiating with their respective governments for rescue packages consisting of loans and grants. Germany Airline (3) (1) A loan of EUR 550 million was granted jointly by the Federal Government https://www.aviationpros.com/ Condor and the State of Hesse. airlines/news/21135864/ eu-green-lights-550-million-state- loan-for-german-airline-condor Japan Auto maker (3) (2) The Development Bank of Japan will extend a loan of JPY 180 bn. to https://www.ft.com/content/86edf167- Nissan Nissan. Of this amount JPY 130 bn (= USD 1.2 bn.) is subject to a 212c-4509-92b1-9e3d0e831c2a government guarantee, covering 80% of the principal.

1 The German government has also announced that it will inject EUR 300 million equity capital in the private sector medical company CureVac AG, but this is not considered as directly related to the COVID-19 crisis.

TACKLING COVID-19: POLICY RESPONSES CONCERNING SOES AND RELATED RESCUE OPERATIONS ACTION TO OFFER EQUITY OR OTHER BALANCE SHEET SUPPORT TO PRIVATE FIRMS  5

Korean Air will acquire a 30.77% stake in Asiana from a consortium of creditors led by the Korea Development Bank (KDB). The KDB plans to invest 500 billion won in shares to be issued by Hanjin KAL (the largest shareholder of Korean Air) and 300 billion won in the company's convertible bonds. It is estimated that the transactions could ultimately lead to KDB owning 11% of Hanjin KAL. New Airline (2) (1) A stand-by loan of NZD 900 million ($514 million) Zealand Air New Zealand Charging an interest rate of up to 9% (if not better source of financing) Suspend dividend payments while any loan is outstanding Government can also push Air New Zealand to raise capital to repay the debt. Can convert it into equity in the company. Switzerland Air transport (3) (1) The Swiss Government granted SR Technics Switzerland AG a deficiency https://www.admin.ch/ SR Technics guarantee of 60% on a bank loan of CHF 120 million in order to bridge a gov/en/start/documentation/media- liquidity shortage. releases/media-releases-federal- council.msg-id-79695.html

TACKLING COVID-19: POLICY RESPONSES CONCERNING SOES AND RELATED RESCUE OPERATIONS 6  ACTION TO OFFER EQUITY OR OTHER BALANCE SHEET SUPPORT TO PRIVATE FIRMS

Country Industry Nature of the Status of Description Source (add link) support/measure implementation ______(1) Full or partial takeover (1) Action taken (2) Action that can lead to (2) Actively takeover considered (3) Loans or guarantees; (3) Action (4) other possible/speculated United Rail (1) (1) Nationalisation of the bulk of the UK railway business through lifting of https://www.railfreight.com/ Kingdom Rail concession concessions granted to private operators of passenger rail for a period of at policy/2020/03/23/uk-partial-rail- (passenger) least six months. nationalisation-to-battle- Operating companies put on to a management fee basis (similar to those coronavirus/?gdpr=accept already in place on the East Coast Main Line and Northern franchise networks) which compensates them for running trains. UK government assumes all operating risks. United Airline (3) (1) The government and Bank of England’s emergency Covid-fund has https://www.bankofengland.co.uk/ Kingdom Various extended loans to the following airlines: markets/bank-of-england-market-  British Airways (GBP 300 million); operations-guide/results-and-usage- data  Easyjet (GBP 600 million);  Ryanair (GBP 600 million) ; https://www.aoa.org.uk/wp- content/uploads/2020/03/24.03.2020-  Wizz Air (GBP 300 million). Letter-from-the-Chancellor-of- Exchequer-to-Airports.pdf United Communication (1) (1) The UK government and Bharti Enterprises Ltd. (an Indian-based company https://www.gov.uk/ Kingdom technology with an operational arm in the U.K.) jointly purchased the space-based government/news/uk-government-to- OneWeb technology company, which had filed for bankruptcy in March. Each partner acquire-cutting-edge-satellite-network committed $500 million USD to the acquisition deal. United Engineering and (3) and (4) (1) The company’s GPB 5 billion recapitalisation package will include: https://www.rolls- Kingdom Manufacturing  GBP 2bn bond offering; royce.com/media/press- Rolls Royce releases/2020/15-10-2020-rr-prices-  GBP 2bn fully underwritten rights issue; pound-2-billion-equivalent-senior- notes-offering.aspx  2 year loan facility of GBP 1bn UK Export Finance has extended its 80% guarantee to support a potential increase of up to £1 billion to the company’s existing £2 billion five-year term loan facility.

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TACKLING COVID-19: POLICY RESPONSES CONCERNING SOES AND RELATED RESCUE OPERATIONS 8  ACTION TO SUPPORT EXISTING WHOLLY OR PARTLY-OWNED SOES

Table 2 - Action to support existing wholly or partly-owned SOEs2

2 Not included in the table are recent Ukrainian measures to support state-owned banks burdened with non-performing loans, as this issue predates the Covid-19 crisis (https://www.kyivpost.com/business/business-update-april-15-land-market-reform-opposition-forest-fire-fines-increased.html).

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It is estimated that the two governments will subsequently each hold each 21.8% of the company’s shares. Finland Airline (3) and potentially (1) (1) The Finnish government obtained EU approval for a loan guarantee of up to https://company.finnair.com/ Finnair EUR 600 million. The state will guarantee 90% of the loan amount. en/media/all-releases/ news?id=3713227 Finnair undertook a rights issue worth around EUR 500 million in early July. Prior to the issue Finnair was 55.8% owned by the Finnish government. The https://company.finnair.com/ government’s ownership share remains virtually unchanged as a result of en/media/all- the transaction. releases/news?id=3672410

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France and Airline (3) (1) The French government has pledged EUR 7 bn to Air France in the form of https://www.bbc.com/ Netherlands Air France-KLM a combination of loans and loan guarantees. The package was approved by news/world-europe-52527517 the European Commission in the first week of May. . Two month later the Dutch government provided EUR 3.4 bn. to KLM, in the form of EUR 2.4 bn. https://ec.europa.eu/commission/ loan guarantees and a subordinated loan of EUR 1 bn. presscorner/detail/en/IP_20_1333

There are currently no concrete plans for an equity investment. The French and Dutch state are a shareholder in Air France – KLM at respectively 14,3% and 14,0%. Hong Kong, Airline (1), (2) and (3) (2) The government of Hong Kong has made HKD 27 bn. available, through a https://on.ft.com/3cTyOwr China Cathay Pacific combination of preference share and bridge warrant-linked loan. If the warrants are exercised the government will ultimately own around 6% of the company. The government further assumes two “observer positions” in the company’s board of directors. Israel Airline (2) and (3) (2) The board of El Al has accepted an aid package worth a total USD 400 https://www.timesofisrael.com/el-al- El Al million. Of this amount, USD 250 is given as a loan guarantee with the state accepts-400m-bailout-with-airline- accepting 75% of the credit risk. A stock offering will raise the other USD likely-to-be-nationalized/ 150 million with the state acting as buyer-of-last-resort. It is expected that this will lead to majority state ownership of the company. Italy Airline (1) (1) A government Decree introduces financial measures for the aviation sector Italian Law Decree no. 18 Alitalia to be services by a fund of € 500 million. Decree authorises activities carried https://www.gazzettaufficiale.it/ out by Alitalia S.p.A. and Alitalia Cityliner S.p.A. (both in extraordinary eli/gu/2020/03/17/70/sg/pdf administration) – the creation of a new company fully controlled by the Ministry of Economy and Finance ("MEF") or controlled by a company with large public participation. The MEF is authorised to own share capital or to strengthen the assets of the new company.

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Mexico Energy N/A (2) The government of President Andres Manuel Lopez Obrador has promised https://fr.reuters.com/article/ to provide “extraordinary support” to Pemex, which is laboring under a huge commoditiesNews/ debt burden. idAFL1N2BK13V New Airline (2) (1) A stand-by loan of NZD 900 million ($514 million) https://www.breakingviews.com/ Zealand Air New Zealand Charging an interest rate of up to 9% (if not better source of financing) considered-view/new-zealand- Suspend dividend payments while any loan is outstanding airline-rescue-puts-taxpayers-in- Government can also push Air New Zealand to raise capital to repay the first/ debt.

Can convert it into equity in the company. Norway Airport operator (4) (3) The Norwegian Parliament has in 2020 granted the state-owned airport https://www.stortinget.no/no/Saker Avinor AS operator Avinor AS a grant up to MNOK 4270, no dividend for the financial -og- year 2019 and a grace period in 2020 on the company´s government loan. publikasjoner/Saker/Sak/?p=7978 The grant includes funds to cover additional costs for further operation of the 4 private operated airport Haugesund Airport.

Peru Commercial (4) (1) Lift the restriction to a financial SOE (Banco de la Nación) to lend to Article 22 of the Urgent Decree n. SOEs commercial SOEs, including public utilities to cover liquidity issues arising 33/2020 out of the immediate effects of the crisis. https://busquedas.elperuano.pe/ normaslegales/decreto-de-rgencia- que-establece-medidas-para- reducir-el-im-decreto-de-urgencia- no-033-2020-1865180-1/

TACKLING COVID-19: POLICY RESPONSES CONCERNING SOES AND RELATED RESCUE OPERATIONS 12  ACTION TO SUPPORT EXISTING WHOLLY OR PARTLY-OWNED SOES

Country Industry Nature of the Status of Description Source (add link) support/measure implementation ______(1) Full or partial takeover (1) Action taken (2) Action that can lead to (2) Actively takeover considered (3) Loans or guarantees; (3) Action (4) Other possible/speculated Poland SOEs (4) (1) The European Commission has approved a €123 million (PLN 545m) Polish https://www.thefirstnews.com/ scheme to support companies affected by the coronavirus outbreak. The article/ec-approves-eur-123-million- support will take the form of: (i) a reduction of the annual fee due for the polish-programme-to-support- perpetual usufruct, and (ii) an exemption of the rent, lease or usufruct fees companies-14438 owed by companies that use publicly owned real estate for their business activities. Portugal Airline (1) (1) A rescue package with two main elements has been agreed. The Various press reports. TAP government extends an emergency loan of EUR 1.2 billion to the company. And the government buys out one of the other shareholders in the company (acquiring 22.5% of the stock for EUR 55 million), raising the state’s share to 72.5%. Portugal Airline (4) (1) The European Commission has approved a liquidity support for the regional https://www.portugalresident.com/s SATA airline the amount of EUR 133 million. It is not in a strict sense COVID-19 ata-in-e133-million-restructuring- related as the airline was deemed to be in difficulties prior to the crisis. bailout/ Singapore Airline and (2) and (4) (2) Efforts are advanced to raise USD 15 billion funds to issue new shares in Information provided by the shipbuilding Singapore Airlines. The first offer is equity, followed by the issuance of Singaporean authorities. Singapore mandatory convertible bonds. Temasek is committed to acting as buyer of https://www.reuters.com/article/us- Airlines last instance. sembcorp-marine-m-a-sembcorp- Sembcorp Marine Temasek also recapitalised Sembcorp Marine, a domestic shipbuilding and inds/temasek-steps-in-to-support- repair conglomerate, for USD 1.5 billion in June. It is likely that Temasek will sembcorp-marines-1-5-billion- eventually be the biggest direct shareholder of the company. rights-issue-idUSKBN23F0LM South Airline (4) (2) The wholly state-owned company is slated to receive a recapitalisation of https://airlinegeeks.com/2020/06/02 Africa South African USD 1.2 billion from its government owner. /south-african-airways-to-receive-1- Airways 2-billion-government-bailout-draft- plan-says/ Sweden3 Air transport (4) (2) The Swedish government proposed on 15 June, a capital injection of 3.15 https://www.reuters.com/article/heal Swedavia billion Swedish crowns ($336 million) into state-owned airport operator th-coronavirus-sweden-airports/swe Swedavia. dish-govt-proposes-336-mln-capital -injection-into-airport-operator- swedavia-idUSL8N2DS1EY

3 In addition two government agencies (which could be considered at state owned quasi-corporations) overseeing air and maritime transportation were recapitalised by the state.

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Switzerland Air transport (3) (1) The Swiss government agreed to extend loan guarantees to ensure a loan https://www.admin.ch/ Swiss of CHF 1.5 billion for the two companies. The state will guarantee 85% of gov/en/start/documentation/ International; and the amount of the loan. media-releases.msg-id-78741.html Edelweiss. https://www.admin.ch/ gov/de/start/dokumentation/ medienmitteilungen.msg-id- 78944.html

https://www.bazl.admin.ch/ bazl/fr/home/medias/communiqu %C3%A9s-de-presse.msg-id- 81061.html

TACKLING COVID-19: POLICY RESPONSES CONCERNING SOES AND RELATED RESCUE OPERATIONS 14  PROGRAMMES, SCHEMES AND STATEMENTS BY GOVERNMENTS CONCERNING BROADER SUPPORT MEASURES

Table 3 - Programmes, schemes and statements by governments concerning broader support measures

* a EUR 8 billion scheme to compensate companies for effects of the Covid outbreak. Under the scheme, undertakings will be entitled to compensation for certain damages suffered as result of the coronavirus outbreak. As notified by Austria, the compensation, in the form of direct grants, can cover a maximum of 75% of fixed costs incurred during a limited period of three months, with a maximum amount of €90 million per group. Czech (3) (1) The European Commission has approved an approximately EUR 5.2 billion Czech loan https://ec.europa.eu/commission/ Republic guarantee scheme for large companies with export activities affected by the coronavirus presscorner/detail/en/ip_20_794 outbreak. The scheme will be managed by the Czech export credit agency EGAP. Denmark (4) (1) Denmark has implemented a programme compensating companies for Covid-related losses. https://ec.europa.eu/commission/ Under the scheme, private which have a proven decline in revenues of more than 40 % because presscorner/detail/en/ip_20_541 of the coronavirus outbreak will be entitled to compensation for the damages suffered. In particular, they will be compensated in part or in full for the fixed costs that they continue to bear. Estonia (3) (1) Estonia has announced credit guarantee schemes administered by two state-owned financial https://ec.europa.eu/ institutions. Under both schemes, with a total estimated budget of EUR 1.75 billion, the support commission/presscorner/ will consist either in the provision of public guarantees on existing or new loans or in the granting detail/en/ip_20_559 of loans at favourable terms.

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Country Nature of the Status of Description Source support/measure implementation (add link) ______(1) Takeover (1) Action taken (2) Equity injections (2) Actively considered (3) Loans and guarantees; (3) Action (4) Direct grants possible/speculated European (1) or (2) (2) The European Commission will temporarily dispense from some of the state aids rules applying https://ec.europa.eu/ Union to recapitalisation and subordinated debt to companies in need, subject to certain conditions commission/presscorner/ and as elaborated in the second amendment (May 2020) to the EU Temporary Framework May detail/en/ip_20_838 2020. It also allows for Member States to design national measures in line with additional policy objectives, such as further enabling the green and digital transformation. Conditions bear on:  Necessity, appropriateness and size of intervention;  State's entry in the capital of companies and remuneration;  Exit of the State from the capital of the companies concerned: setting timeline of six to seven years for large companies with significant recapitalisation aid;  Governance; beneficiaries may not pay dividends, engage in share buy-backs or pay out bonuses.  Prohibition of cross-subsidisation and acquisition ban: may not engage in corporate takeovers while being subject to the recapitalisation measures It also introduces more favourable conditions for undertakings where private investors contribute together with the State to the capital increase of companies. Finland (3) or (4) (1) Finland has implemented a EUR 2 billion scheme to support companies affected by the https://ec.europa.eu/commission/ coronavirus outbreak. The scheme will be implemented by a state-owned financial institution. presscorner/detail/en/ip_20_705 Under the scheme, the public support will take the form of: (i) state guarantees on new investment and working capital loans; and (ii) subsidised investment and working capital loans with favourable interest rates.

TACKLING COVID-19: POLICY RESPONSES CONCERNING SOES AND RELATED RESCUE OPERATIONS 16  PROGRAMMES, SCHEMES AND STATEMENTS BY GOVERNMENTS CONCERNING BROADER SUPPORT MEASURES

The plan is expected to mobilise more than EUR 300 billion of liquidity support for companies affected by the economic impact of the Coronavirus outbreak. Germany (2) (2) Federal Government plans to provide EUR 100 billion for capital measures to strengthen the https://www.cliffordchance.com/ equity of companies and ensure their solvency. insights/thought_leadership/ Newly established Economic Stabilisation Fund can participate in companies on a temporary coronavirus.html basis, namely by purchasing shares. Beneficiaries may be “large companies” with more than 249 employees, a balance sheet of Information provided by German more than EUR 43 million and/or an annual turnover of more than EUR 50 million, as well as authorities. smaller companies which are relevant for critical infrastructures. Equity measures may be subject to specific conditions, e.g. concerning the remuneration of board members, the disbursement of dividends or the use of the Fund’s capital. The Federal Minister of Finance is “prepared to take all action necessary to save the economy.” Germany (3) (1) Germany has implemented two separate support measures, implemented through the German https://ec.europa.eu/commission/ promotional bank Kreditanstalt für Wiederaufbau (“KfW”): presscorner/detail/en/IP_20_504 (i) A loan programme covering up to 90% of the risk for loans for companies of all sizes. Eligible loans may have a maturity of up to 5 years and can reach €1 billion per company, depending on the company's liquidity needs. (ii) A loan programme in which the KfW participates together with private banks to provide larger loans as a consortium. For this scheme, the risk taken by the State may cover up to 80% of a specific loan but not more than 50% of total debt of a company.

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Country Nature of the Status of Description Source support/measure implementation (add link) ______(1) Takeover (1) Action taken (2) Equity injections (2) Actively considered (3) Loans and guarantees; (3) Action (4) Direct grants possible/speculated Germany (2) and (4) (1) The European Commission has approved German plans to set up a €46 billion fund at the level https://ec.europa.eu/commission/ of the German State (Land) of Bavaria to provide guarantees and invest through debt and presscorner/detail/en/ip_20_1502 equity instruments in enterprises affected by the coronavirus outbreak in Bavaria. Germany (4) (1) The European Commission has approved a €6 billion German scheme to compensate https://ec.europa.eu/commission/ companies providing regional and local public passenger transport services in Germany for the presscorner/detail/en/IP_20_1463 damage suffered due to the coronavirus outbreak and the emergency containment measures introduced in Germany to limit the spread of the virus. Greece (3) (1) Greece has implemented a repayable advances scheme amounting to an estimated EUR 1 https://ec.europa.eu/commission/ billion to support companies affected by the coronavirus outbreak. The scheme is open to presscorner/detail/en/ip_20_611 companies active in all sectors and applies to the whole territory of Greece. Hungary (3) (1) Hungary has implemented a EUR 1.55 billion scheme to support companies affected by the https://ec.europa.eu/commission/ coronavirus outbreak. The scheme consists of loan guarantees through two government-linked presscorner/detail/en/ip_20_771 credit entities. Peru (3) (3) The ownership agency Fonafe is ready to provide equity support mainly for the purpose of new Information provided by the capital investment, but some SOEs which were weak already before the crisis which will be Peruvian authorities. needing equity support. Indonesia (2) (2) A newly enacted government regulation Perppu No.1/2020, grants the government the https://www.thejakartapost.com/ authority to inject state capital as part of a national economy recovery program. The program news/2020/04/01/government- states that it aims to protect, maintain and improve the economic ability of business owners in redirects-state-capital-injections- the real economy and financial industry. as-covid-19-hits-businesses.html Ireland (2) and (3) (2) The Ireland Strategic Investment Fund (ISIF) will make available a new €2 billion fund to https://isif.ie/pandemic- support medium and large enterprises in Ireland affected by Covid-19. The new fund, to be stabilisation-and-recovery-fund known as the Pandemic Stabilisation and Recovery Fund (PSRF), will have €2 billion in total capital and will be made available through a sub-portfolio within ISIF.

TACKLING COVID-19: POLICY RESPONSES CONCERNING SOES AND RELATED RESCUE OPERATIONS 18  PROGRAMMES, SCHEMES AND STATEMENTS BY GOVERNMENTS CONCERNING BROADER SUPPORT MEASURES

Italy (3) (2) Italy has announced a guarantee scheme for new working capital and investment loans granted https://ec.europa.eu/commission/ by banks, to support companies affected by the coronavirus outbreak. The aid will be granted presscorner/detail/en/ip_20_655 through financial institutions, to companies affected by the coronavirus outbreak. The Italian authorities have communicated a total budget of up to €200 billion for the scheme. Italy (3) and (4) (1) Italy has announced a €9 billion “umbrella” scheme to support companies affected by the https://ec.europa.eu/commission/ coronavirus outbreak. Under the scheme, the Italian Regions and Autonomous Provinces, presscorner/detail/en/ip_20_925 other territorial bodies as well as Chambers of commerce, will be able to provide support to companies of all sizes. Under the scheme, public support can be granted through:

(i) Direct grants, guarantees on loans and subsidised interest rates for loans; (ii) Aid for coronavirus-related research and development (R&D), investment and production; (iii) Wage subsidies for employees to avoid lay-offs during the coronavirus outbreak.

Italy (4) (1) Italy has notified to the European Commission four aid schemes, with an overall estimated https://ec.europa.eu/commission/ budget measures of EUR 7.6 billion, waiving certain taxes for and providing tax credits to presscorner/detail/en/ip_20_1210 companies and self-employed workers affected by the coronavirus outbreak. The measures form part of a wider package to support the Italian economy in the context of the coronavirus outbreak set out in the so-called “Decreto Rilancio”.

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Country Nature of the Status of Description Source support/measure implementation (add link) ______(1) Takeover (1) Action taken (2) Equity injections (2) Actively considered (3) Loans and guarantees; (3) Action (4) Direct grants possible/speculated Latvia (2), (3) and (4) (1) and (2) Several measures have been put in place regarding support of private enterprises. There is a Information provided by the Latvian specific guarantee programme established at Latvia’s national development finance institution authorities. which will be available to private enterprises. As of today, there’s no talk of nationalisation of any commercial enterprises. Lithuania (2) and (3) (2) The European Commission has approved Lithuanian plans to set up a fund with a target size https://ec.europa.eu/commission/ of up to EUR 1 billion that will invest through debt and equity instruments in medium-sized and presscorner/detail/en/ip_20_943 large enterprises active in Lithuania affected by the coronavirus outbreak. Netherlands (3) (1) The Netherlands has implemented a guarantee scheme for working capital and investment https://ec.europa.eu/commission/ loans granted by banks, to help Dutch companies meet their liquidity needs in the context of presscorner/detail/en/ip_20_687 the coronavirus outbreak. An estimated EUR 10 billion is available for the scheme. The Dutch State will guarantee 90% of new loans to small and medium-sized enterprises and 80% of new loans to large enterprises. New Zealand (2) (3) Businesses with revenues of more than $80 million, are eligible for tailor-made assistance https://www.newstalkzb.co.nz/on- including temporary state-ownership air/early-edition/audio/oliver- hartwich-how-struggling- businesses-may-come-under- partial-state-ownership/ Norway (3) (1) The Norwegian Government has announced a guarantee scheme in the amount of six billion https://www.giek.no/press-and- Norwegian kroner for loans to airlines with a Norwegian operating license. The scheme is news/news/giek-is-ready-to- administered by the Norwegian Export Credit Guarantee Agency. administer-new-airline- guarantee-scheme

Poland (3) (1) Poland has implemented two schemes: https://ec.europa.eu/commission/ presscorner/detail/en/ip_20_932 * a guarantee scheme on existing or new loans to support companies affected by the coronavirus outbreak. The scheme will enable the provision of public guarantees amounting to up to EUR 22 billion. The support consists in the provision by a state-owned financial institution of public guarantees on investment loans and working capital loans. * a subsidised loan scheme to support companies affected by the coronavirus outbreak. The total amount of loans that can be granted under the scheme is EUR 2.2 billion. Under the scheme, the public support will take the form of subsidised loans at favourable interest rates.. The scheme, which will be managed by the Polish Development Fund, is mostly targeted at large enterprises.

TACKLING COVID-19: POLICY RESPONSES CONCERNING SOES AND RELATED RESCUE OPERATIONS 20  PROGRAMMES, SCHEMES AND STATEMENTS BY GOVERNMENTS CONCERNING BROADER SUPPORT MEASURES

(i) a direct grant scheme; (ii) a State guarantee scheme for investment and working capital loans granted by commercial banks.

The support under both schemes will be accessible to SMEs and large companies facing difficulties as a result of the economic impact of the coronavirus outbreak. The aim of the scheme is to help businesses to cover their immediate working capital or investment needs, thus ensuring the continuation of their activities. Slovenia (3) (1) Slovenia has established a programme with a total estimated budget of around EUR 2 billion https://ec.europa.eu/commission/ to support companies affected by the coronavirus outbreak. The support mostly takes the form presscorner/detail/sl/ip_20_791 of public investment guarantees and working capital loans.

Spain (3) (1) Spain has implemented two credit guarantee schemes targeting new loans and refinancing https://ec.europa.eu/commission/ operations for (i) self-employed workers and small and medium-sized enterprises (SMEs); and presscorner/detail/en/ip_20_520 (ii) larger companies, all affected by the coronavirus outbreak. The schemes have a total budget of approximately EUR 20 billion. For larger companies the state guarantees maximum 70% of the total loan amount. Sweden (2) and (3) (3) According to the Finance Minister the government could increase its holdings in large https://www.reuters.com/ companies should they need taxpayer capital to ride out the economic slump due to the article/health-coronavirus-sweden- coronavirus pandemic. government/sweden-could-lift- The support would be part of a wider set of support measures which include loan guarantees. state-ownership-in-large- No company has yet to receive outright capital injections. The Minister said that while the companies- government was not in a position to take on ownership in the many smaller firms facing due-to-virus-crisis-fin-min- difficulties, doing so for larger corporations was a possibility. idUSL8N2BN1XF and information provided by the Swedish authorities.

TACKLING COVID-19: POLICY RESPONSES CONCERNING SOES AND RELATED RESCUE OPERATIONS PROGRAMMES, SCHEMES AND STATEMENTS BY GOVERNMENTS CONCERNING BROADER SUPPORT MEASURES  21

https://covid19.easygov.swiss/en/ United (2), (3) and (4) (1) The UK government has implemented an “umbrella scheme” providing assistance to private https://ec.europa.eu/commission/ Kingdom enterprises with an estimated budget of EUR 57 billion. It allows for the provision of aid in the presscorner/detail/en/ip_20_603 form of: (i)) Direct grants, equity injections, selective tax advantages and advance payments; (ii) State guarantees for loans subject to safeguards for banks to channel State aid to the real https://www.bankofengland.co.uk/ economy; (iii) Subsidised public loans to companies with favourable interest rates.The list of markets/covid-corporate-financing- schemes include: facility  Covid Corporate Finance Facility (CCFF) scheme (Treasury and Bank of England) to provide emergency financing to large business in the form of purchased short-term https://www.gov.uk/guidance/ apply-for-the-covid-19-corporate- debt financing-facility  Coronavirus Large Business Interruption Loan Scheme (CLBILS) (for those which do not qualify for CCFF) which helps medium and large businesses to access loans and https://www.gov.uk/guidance/ apply-for-the-coronavirus-large- other financing with a government guaranteed of 80%. business-interruption- loan-scheme#history United (3) (2) The UK Treasury has announced a new bailout plan named “Project Birch” aimed at saving https://on.ft.com/3cX4jGC Kingdom strategically important companies, by which is meant companies whose failure would “disproportionately harm the economy”. https://www.gov.uk/government/ news/government-agrees-support- package-to-uk-steel-company The scheme will be available to all sectors of the economy, but according to press report the main corporate contenders so far are found in the aviation and aerospace sectors and in the heavy industries (to date only Cesla Steel has been granted financial assistance)The scheme will initially rely on loans rather than equity injections, but the Treasury does not rule out the use of convertible debt instruments.

TACKLING COVID-19: POLICY RESPONSES CONCERNING SOES AND RELATED RESCUE OPERATIONS 22  PROGRAMMES, SCHEMES AND STATEMENTS BY GOVERNMENTS CONCERNING BROADER SUPPORT MEASURES

https://www.bloomberg.com/  up to $454 billion for the emergency lending facilities of the Federal Reserve Board to news/articles/2020-03-19/ provide loans, loan guarantees and investments in eligible businesses, states and trump-says-he-d-support-limits-on- municipalities. bonuses-buybacks-in- stimulus?srnd=premium Government officials have stated that part of the support could go to large business and could take the form of taking an equity stake by government. https://www.bloomberg.com/ news/articles/2020-03-19/ kudlow-says-government-could- For the US airline sector assistance worth US$ 25 billion is foreseen. Most of this amount will take-equity-stakes-for-company-aid apparently take the form of grants, but 30% of the assistance will be redeemable loans. The airlines will have to offer stock warrants on a portion of those loans. According to press reports, the following airlines have signed letters of intent with the US Department of Treasury: Delta, United, JetBlue, Southwest, Alaska, American, Frontier, Hawaiian, SkyWest and Spirit. https://www.theguardian.com/ Executives of two of the airlines have stated the following: business/2020/apr/14/us- government-coronavirus-bailout- airlines-industry  Delta said it would receive $5.4 billion and would provide the government with warrants to acquire about 1% of its stock at a price of $24.39 a share over a period of five years. https://www.nytimes.com/ 2020/04/14/business/

Southwest Airlines said it expected to receive $3.2 billion, about $1 billion of which would come coronavirus-airlines-bailout- in the form of a low-interest loan. That loan is expected to include about 2.6 million warrants treasury-department.html that would allow the Treasury to buy stock in the company.

TACKLING COVID-19: POLICY RESPONSES CONCERNING SOES AND RELATED RESCUE OPERATIONS