Ottawa to create bridge financing for large companies; expanding its credit program for mid-sized companies
Photo: Finance Minister Bill Morneau
CANADA UNVEILED A loan program for large firms that have been hit by Covi-19 and can’t get financing by conventional means.
The Large Employer Emergency Financing Facility is for companies and non-profit organizations with annual revenue of $300 million or more.
Firms in all sectors can apply for the funding except the finance industry. Companies that receive money will have to accept limits on executive pay, dividends and share buybacks.
“We are trying to make sure that we help all sectors across the economy that are facing a challenge because of the Covid-19 crisis,” Finance Minister Bill Morneau said during a press conference in Toronto.
The lending facility aims to stop bankruptcies of otherwise viable firms and protect the Canadian economy, according to an emailed statement from Prime Minister Justin Trudeau’s office. It isn’t intended to bail out companies that were already in financial trouble before the pandemic, the government said.
Recipients will need to “respect collective bargaining agreements and protect workers’ pensions,” according to the statement.
“Our approach today is to have credit for large- and medium-sized businesses in order to be able to continue their activities after the crisis,” Morneau said.
Companies accessing the fund will have to publish financial disclosures annually on climate change and how their business ties into the government’s sustainability objectives.
The federal government also announced the expansion of an earlier plan, the Business Credit Availability Program, to mid-sized companies with larger financing. The government will provide loans up to $60 million (Cdn) per company through BCAP and guarantees of up to $80 million.