Extended factory closures will slow manufacturing and weigh on global supply chains
More than 300 Chinese firms including Meituan Dianping, China's largest food delivery company, and smartphone maker Xiaomi Corp are seeking bank loans totalling at least 57.4 billion yuan ($8.2 billion) to soften the impact of the coronavirus, two banking sources said.
The firms, including China's dominant ride hailing service provider, Didi Chuxing Technology Co, Megvii Technology Inc and Qihoo 360 Technology Co, were either involved in the control of the epidemic or had been hardest hit, the sources told Reuters on Monday.
China is struggling to contain the epidemic, which has killed more than 900 people, the vast majority on the mainland, and infected more than 40,000.
Authorities have cordoned off cities, suspended transport links and shuttered facilities where crowds gather, hammering economic growth which one senior economist said may slow to 5 percent or less in the first quarter.
Extended factory closures will slow manufacturing and weigh on global supply chains.
The companies seeking loans in the Chinese capital are likely to get fast-track approvals and preferential rates, said the sources, who received copies of two lists of company names sent to banks in Beijing by the city government's finance bureau.
There are no official data so far showing the total loans Chinese companies are seeking nationwide to weather the outbreak.
The two lists also contained the size of loans sought by the firms, which include pharmaceutical firms and restaurants. The bureau had earlier said firms seeking financial support could ask for its help.
"Banks will have the final say on lending decisions," one of the sources said. "The interest rates are likely to be on par with those offered to banks' top clients."
Xiaomi, the world's fourth-biggest smartphone maker, is seeking 5 billion yuan ($716.24 million) in loans to produce and sell medical equipment including masks and thermometers, according to the lists.
Meituan Dianping is seeking 4 billion yuan ($572.99 million), partly to help finance free food and delivery to medical staff in Wuhan, the epicentre of the outbreak in central Hubei province.
Privately held Didi Chuxing, "severely impacted by the virus outbreak", is seeking 50 million yuan ($7.16 million).
According to exchange disclosures, Xiaomi's revenue growth for the quarter ended September slowed, but gross profit for the quarter surged 25.2 percent to 8.2 billion yuan on-year. Meituan Dianping has been profitable for the past two quarters since being listed in Hong Kong in the summer of 2018.
Beijing-based internet security company Qihoo 360 is seeking 1 billion yuan ($143.25 million) to buy medical-related products and finance work on apps to track and contain the virus.
Facial recognition startup Megvii applied for 100 million yuan ($14.32 million) to develop new technology including means to improve the accuracy of identifying individuals with masks in crowds.
Beijing-based Megvii has sought to raise funds via an initial public offering in Hong Kong, but faces headwinds from a US trade blacklist over its alleged involvement in human rights violations related to Beijing's clampdown on Uighurs in China's Xinjiang region. The company said at the time it "strongly objected" to the US move.
Meituan Dianping, Didi, Xiaomi and Megvii declined to comment, while Qihoo 360 did not immediately respond to Reuters requests for comment.
The financial bureau of the Beijing city government did not respond to an emailed request for comment.
To help combat the impact of the virus, China's central bank has injected cash into the banking system to shore up market confidence. The banking and insurance watchdog has also urged lenders to lower interest rates.
The local bureaus of the National Development and Reform Commission (NDRC), the top economic planner, and the Ministry of Industry and Information Technology (MIIT) are also compiling lists of affected companies and offering them support.