THE EMPLOYERS' EDGE
FEDERAL UPDATE: GOVERNMENT ANNOUNCES LARGE EMPLOYER EMERGENCY FINANCING FACILITY LOAN PROGRAM AN EXPANSION OF BUSINESS CREDIT AVAILABILITY PROGRAM
Earlier this morning, the government announced two additional measures to support employers through the COVID-19 pandemic. The government’s press release can be found here.
First, the government introduced the Large Employer Emergency Financing Facility (LEEFF) to provide bridge financing to Canada’s largest employers whose needs during the pandemic are not being met through conventional financing. The LEEFF program will be open to large for-profit businesses, excluding the financial sector, as well as certain not-for-profit businesses, such as airports, with annual revenues in the order of $300 million or more annually. To qualify, companies must be seeking support of $60 million or more, have significant operations or workforce in Canada, and not be involved in active insolvency programs.
The support is not intended to resolve insolvencies or restructure firms, nor will it provide financing to companies that otherwise have the capacity to manage through the crisis. Rather, the support is intended to assist viable firms avoid bankruptcy for COVID-19 related reasons. The program will be delivered through the Canada Development Investment Corporation in cooperation with Innovation, Science and Economic Development Canada and the Department of Finance.
While many of the details remain to be seen, the government provided the following parameters that will guide all aspects of the program:
- Protection of taxpayers and workers: companies will be required to demonstrate how they intend to preserve employment and investment; commit to respecting collective agreement and pension obligations; and require strict limits to dividends, share buy-backs, and executive pay. To determine eligibility, an assessment may be made of a company’s employment, tax and economic activity (both domestic and international). Accordingly, companies will be required to disclose their organizational structure and financing agreements along with a continuing obligation to publish annual climate-related disclosure reports while participating in the program. The program will not be available to companies that have been convicted of tax evasion.
- Fairness: the financing is intended to apply to all eligible sectors.
- Timeliness: LEEFF will apply standard set of economic terms and conditions.
Second, the government is expanding access to the Business Credit Availability Program (BCAP) to mid-sized Companies. This support will include loans of up to $60 million per company, and guarantees of up to $80 million.
Additional details are expected to be announced in the coming days.
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