However, FT analysis shows that more than half a dozen large multinationals have been using the facility for a year while also finding cash for large and often increased dividend payouts. The Covid Corporate Financing Facility was designed to “provide temporary direct support to investment-grade firms with short-term cash flow problems” — offering access to very cheap finance through the Bank.
The companies include Baker Hughes, Boots, Spanish energy company Iberdrola and infrastructure group ACS, Mexican industrial conglomerate Orbia, Israeli chemicals maker ICL Group and Australian engineer Worley. Much of the money matures this month. The fund supported our UK business activities at a time of volatility
Other companies — including BASF and Bayer — repaid their debts earlier after the economic shock of Covid proved to have less of an impact on their finances than initially feared. In mid-May last year the BoE closed the loophole allowing companies to pay dividends and raise wages while using the scheme. But those that used the facility before then have been able to pay out cash from their balance sheets for pay and dividends.
MP Margaret Hodge, former chair of the public accounts committee, said it was “an utter disgrace that massive global companies are borrowing taxpayer-backed cash while hiking up their dividends at the same time. Lining the pockets of shareholders is a total abuse of taxpayer money and executives at these corporations should hang their heads in shame.” BoE data last week confirmed that Baker Hughes had repaid the £600m it borrowed, using a UK subsidiary set up last April.
Baker Hughes paid out $131m in dividends in the first three months of the year. In 2020 it paid $488m, up from $395m in 2019. All companies rated as investment grade and making a material contribution to the UK economy, including through subsidiaries, are eligible for the scheme.
Retailer Walgreens Boots Alliance, which borrowed £300m from the BoE through its UK Boots operation, this month declared a quarterly dividend of 46.75 cents a share, unchanged from the previous quarter but up 2.2 per cent from a year earlier. It paid $808m in the six months to the end of February. Iberdrola, which owns Scottish Power and borrowed £100m through the scheme, said the facility would be repaid this month. “In 2020, the impact of Covid on our UK business was in the region of €130m,” the company said. “The fund supported our UK business activities at a time of volatility.” Orbia, which has several UK subsidiaries and borrowed £300m through the CCFF, paid dividends of $230m and bought back $42m in shares in the 2020 calendar year.
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