The federal government is providing bridge financing to the country’s largest employers.
“Let me be clear. “These are bridge loans, not bailouts,” said Prime Minister Trudeau. “We need to make sure the money is going to support workers every step of the way.”
The federal government established the Large Employer Emergency Financing Facility (LEEFF) to provide bridge financing for Canada’s largest employers. Trudeau introduced LEEFF on Monday during his daily media briefing from Rideau Cottage.
The Business Development Bank of Canada (BDC) and Export Development Canada (EDC) will be working with private sector lenders to increase access to capital with strict limits on dividends, share buybacks and executive compensation.
The prime minister says companies will need to make certain commitments around executive pay. “We’ll be introducing measures to protect workers, their pensions and collective agreements.”
Is it too risky for the government to take on all this debt?
“We need to make sure we’re supporting these employers so Canadians will have jobs when we bounce back from this pandemic.” The prime minister says he wants these companies to turn to private markets but he says Ottawa will be there as a “lender of last resort.”
He says the Large Employer Emergency Financing Facility (LEEFF) will not be used to resolve insolvencies or restructure firms, nor will it provide financing to companies that otherwise have the capacity to manage through the crisis.
Goldy Hyder, President and CEO of the Business Council of Canada, welcomed the announcement.
“The priority of our members throughout the health emergency has been to preserve as many jobs as possible. Canada’s leading companies have always demonstrated a high level of commitment to their employees and the communities in which they operate. They are world leaders when it comes to sustainable environmental practices, corporate governance and corporate social responsibility.
“We look forward to seeing additional details about the measures unveiled today, but there is no doubt at all about the need,” Hyder wrote in a statement.
Companies will need to meet the following LEEFF criteria
- Companies seeking support must demonstrate how they intend to preserve employment and maintain investment activities. Recipients will need to commit to respect collective bargaining agreements and protect workers’ pensions. The LEEFF program will require strict limits to dividends, share buy-backs, and executive pay. In considering a company’s eligibility to assistance under the LEEFF program, an assessment may be made of its employment, tax, and economic activity in Canada, as well as its international organizational structure and financing arrangements. The program will not be available to companies that have been convicted of tax evasion. In addition, recipient companies would be required to commit to publish annual climate-related disclosure reports consistent with the Financial Stability Board’s Task Force on Climate-related Financial Disclosures, including how their future operations will support environmental sustainability and national climate goals.
- Fairness: To ensure support across the Canadian economy, the financing is intended to be applicable to all eligible sectors in a consistent manner.
- Timeliness: To ensure timely support, the LEEFF program will apply a standard set of economic terms and conditions.
more to come…