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Six Of The Best With The Birch

Posted on Jun 28, 2020. by NTI

NTI have closed the book on Rishi Sunak becoming the next James Bond (the prospect of him being filmed walking out of a frothing ocean in his Orlebar Browns with a red box in one hand and the hopes of a grateful nation in another has the financial world drooling), and sources have registered sightings of him freerunning between the rooftops of Downing Street in preparation for his accession to the role. However, he still has the time to authorise 'Project Birch'. The Financial Times reported on Saturday (27 June) that the Treasury refuse to disclose the names of the six 'strategically important enterprises' who are to be offered loans under the scheme, as they are not eligible for other Government  loan programmes, whilst Celsa Steel (the Cardiff-based subsidiary of Spanish steelmaker Celsa Group) have already been given £30m in exchange for giving assurances on their workforce, reductions in emissions and strict curbs on executive pay.

The five others are said to be in detailed discussions on taking similar loans and are reported to include Jaguar Land Rover (which earlier in June raised £560m from a group of Chinese banks) and Tata Steel, which has been seeking a loan of half a billion pounds Sterling in a move that would support 8,000 jobs in their Port Talbot steelworks. Some of the loans are thought to be structured to include debt that, in some circumstances, can convert into equity, meaning the state could end up owning stakes in the businesses. Only those who have exhausted all other options of raising finance have been permitted to enter into direct talks with the Government and aviation is said to be one of the sectors having conversations.

Could one include Virgin Atlantic which has pumped up its bailout plans from £750m to a cool 'almost billion'? Long-haul carriers, such as Sir Richard Branson's personal carrier, are due to be amongst the slowest to see passenger numbers recover and are said to have been heard pleading with Mr Sunak as he shook (but did not stir) his cocktail in the Commons bar. Virgin has set an 'informal deadline' of early July to agree the deal and Alvarez & Marsal will be appointed Administrators should the bailout talks fail.

Two companies definitely not involved in the Project Birch are Aston Martin and McLaren (the first being of particular interest to our own agent Rishi, who raised £260m in fresh equity on Friday and a £20m Government-backed loan under a separate support scheme). Overall, TheCityUK, the finance sector's trade group, has estimated the value of Government-backed loans could climb above £100bn, a number which would be staggering had there not been numbers of equal Galactic-weight been bandied around in the past four months or more.

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