Aided companies also wouldn’t be able to issue dividends
March 25, 2020 By Victor Reklaitis
Time to say bye-bye to Boeing’s buybacks? Bloomberg News
As Washington works on delivering a massive coronavirus econonmic stimulus package, lawmakers have felt pressure to ban any companies that receive aid from repurchasing their shares.
A provision that does exactly that looks set to be included in the package that Democrats and Republicans have agreed on.
See:Airlines and Boeing want a bailout — but look how much they’ve spent on stock buybacks
In a letter to colleagues on Wednesday, Senate Minority Leader Chuck Schumer said a prohibition on buybacks was among the changes that Democratic lawmakers had made to the legislation initially proposed by Senate Republicans.
There is a provision to “ban stock buybacks for the term of the government assistance plus 1 year on any company receiving a government loan from the bill,” the New York Democrat wrote.
Aided companies also are expected to be prohibited from paying dividends on common stock, with that ban ending a year after their government loan has been paid off.
Related:Lobbyists have asked U.S. government for at least $2.3 trillion in aid
The Senate was on track to pass the $2 trillion stimulus package on Wednesday, while House lawmakers were expected to try to approve the package on Thursday. A final bill text was not yet available.
U.S. stocks DJIA, +2.39% SPX, +1.15% have been hammered this month by coronavirus-related worries, but they closed sharply higher Tuesday, with analysts pinning the gains on stimulus hopes. The Dow industrials also were advancing on Wednesday afternoon.
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