Up Again Morocco: Government Relief and Tax

Restructuring

1. Legislative changes: are there any additional processes or support which have been introduced as a response to the pandemic which I may not have considered previously?

There have been no legislative changes made to the Moroccan Bankruptcy Law in relation to COVID-19 besides the measures that have been approved to help companies.

2. Is there anything else I should look out for?

None.

Finance

3. What do you need to consider in terms of your funding requirements for returning to business and are there any return to business financial assistance packages being made available by government?

There is no available financial assistance specifically related to returning to business. Nevertheless, the following measures have been taken by the government.

The Moroccan Central Bank, Bank Al Maghrib, has adopted a set of monetary and prudential policy measures to support access to bank credit for both families and businesses. The measures allow Moroccan banks to access all available refinancing instruments in Moroccan Dirhams and foreign currencies.

Bank Al Maghrib has also reduced the lending rate by 25 basis points, from 2.25% to 2%.

Bank Al Maghrib issued a statement calling on credit institutions to refrain from distributing a dividend in the context of the COVID-19 pandemic. 

Bank Al Maghrib announced in a circular the implementation, over a period of two years, of a refinancing line for banks regarding loans granted to SMEs and for which the bank has not received a refinancing from Bank Al Maghrib as part of the business support and financing programme.

The Ministry of Economy and Finance has created a guarantee facility called Damane Oxygène, which finances companies whose cashflow has deteriorated due to the decline of activity. The guarantee covers 95% of the amount of the loan, and thereby allows banks to quickly set up exceptional overdrafts to finance the working capital needs of concerned enterprises.As of 27 April 2020, banks were authorised to grant loans for a period of three years to sole traders. The interest on those loans will be covered by insurance agencies.

Requirements have been introduced by the economic monitoring committee to defer loan repayments and leasing payments payable by small and medium enterprises (SMEs) and individuals working in regulated professions, such as medicine or law, with difficulties meeting credit repayments due to COVID-19. Such deferred payments are without cost to the borrower and extend until 30 June 2020. The announcement does not specify whether these deferrals of repayments have been placed on national or international lenders, or if these deferrals are of payments of interest or principal.

4. What do you need to consider in terms of your funding requirements for returning to business and are there any return to business financial assistance packages being made available by government?

There are no specific indebtedness mechanisms that could be used for returning to business. However, If the borrower's indebtedness has changed (e.g. the business has temporarily closed), the borrower could negotiate the financial covenants with the lender or get a waiver.

5. How will funding a return to business, including taking on additional indebtedness, impact on your financial or other covenants?

There are no specific remedies (e.g. equity cure or margin ratchets) that should be checked on in light of returning to business in the context of COVID-19.

6. Are there any remedies such as equity cure or margin ratchets that you should be checking on to provide liquidity to prevent a default or improve their financial position?

The practicalities that need to be considered in relation to audit requirements should be discussed with the company's auditor. However, the deadlines for delivering the audited financial statements should be taken into consideration.

7. What is the process if I need any amendments made or waivers given under my loan documentation (including in respect of financial covenants)?

If amendments or waivers are needed under the loan documentation, the existing financing documentation (the loan and other finance documents) should be reviewed. Therefore, the lenders need to be approached and the documentation amendment will depend on the degree of the changes in the borrower's circumstances.

8. Dealing with creditors, including amendments and waivers – Bonds

a. If I can’t comply with the terms of my bond covenants who do I need to notify?

The representative or representatives elected by the ordinary general meeting of bondholders should be informed.

b. If I need to ask for a waiver or amendment to the terms of bonds issued by my business what steps do I need to take?

Any decision calling into question the rights of the bondholders must be approved by the general meeting of bondholders.

c. What is the process for contacting bondholders and holding meetings to agree changes in the terms of my bond documents?

Bondholders' general meetings are convened in the same form and within the same timeframe as shareholders' meetings. They shall deliberate under the same quorum and majority conditions.

9. Is the availability of any return to business funding or relief either (a) conditioned on the use of proceeds for green or social purposes or (b) linked to sustainability-related outcomes? If so, what are the applicable purposes or outcomes?

No return to business funding is conditional on the use of proceeds for green or social purposes or linked to sustainability-related outcomes.