LONDON (Reuters) – COVID-19-hit European companies could issue “hybrid” shares to close projected capital gap of up to 600 billion euros ($ 723.48 billion) when relief measures come the government to end the rollout of vaccine programs, a report said on Tuesday.
The report compiled by PwC advisers and the Association of European Financial Markets (AFME), which represents banks and other market participants, said economic recovery is in jeopardy if the capital gap is not closed. to fill.
He proposes a new hybrid security across the European Union as a preferred share, a type of stock that has the characteristics of standard shares and bonds, usually offering priority in share payments but without voting rights.
“This is where hybrid and equity markets can play a key role in supporting Europe’s recovery,” AFME CEO Adam Farkas said in a statement.
Despite relief from governments and the private sector since the outbreak began, 10% of European companies have cash reserves to last only six months, the report said.
The EU has already introduced a package of “quick fix” measures to make it more attractive for companies to rebuild their finances by issuing stock market shares rather than the most common form of debt. such as undertaking bank loans.
But many medium-sized corporate and SME organizations do not want to take control of their business by issuing ordinary shares, the report said, and are willing to pay a base price without having to weakening their voting rights.
“Hybrid instruments are a great way to meet these needs,” he said.
Policymakers could also examine further use of dual-class shares to address company control concerns, as well as debt for equity swaps to reduce deficit, the report said.
($ 1 = 0.8293 euros)
Reciting with Huw Jones; Edited by Catherine Evans