Le 11 mai 2020, le gouvernement fédéral du Canada a annoncé l'élargissement du Programme de crédit aux entreprises (PCE) et la création du Crédit d'urgence pour les grands employeurs (CUGE). Ces initiatives visent à offrir aux moyennes et grandes entreprises des mécanismes de crédit qui n'étaient pas mis à leur disposition par les programmes de crédit d'urgence précédemment annoncés. Les mécanismes de crédit suivants seront disponibles aux termes du PCE élargi et du CUGE : (i) des prêts allant jusqu'à 60 millions de dollars, (ii) des garanties d'au plus 80 millions de dollars, (iii) un financement de transition pour les grands employeurs du Canada.

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On May 11, 2020, Canada's federal government announced the expansion of the Business Credit Availability Program (BCAP) and the creation of the Large Employer Emergency Financing Facility (LEEFF). This initiative is intended to provide large and medium-sized businesses with credit solutions that were not available to them under previously announced emergency credit solution programs. Credit solutions that will be available under the expanded BCAP and the LEEFF program include (i) loans of up to $60 million, (ii) guarantees of up to $80 million and (iii) bridge financing solutions for large Canadian employers.  

The following is a summary of the BCAP expansion and of the material terms of the new LEEFF program. The information below is based on press releases issued by the Prime Minister's office (here), the Business Development Bank of Canada (BDC) (here) and the Export Development Canada (EDC) (here).

BCAP Expansion

As initially formulated, the BCAP was aimed at primarily supporting small and medium-sized enterprises (see the March 13, 2020, March 18, 2020, March 27, 2020 and March 30, 2020 statements; see also our article discussing these statements). The May 11 announcement relates to the expansion of the BCAP to larger enterprises that need assistance in dealing with financial pressures in the current economic situation. This expanded BCAP support is provided in collaboration with the BDC and EDC and is described below.

BCAP support: BDC loans

Under the expanded BCAP, the BDC will provide eligible companies with commercial loans ranging from $12.5 million to $60 million. To be eligible for loans of this size, the BDC anticipates that a company will need to have annual revenue in excess of $100 million, and notes that, to be eligible, such a company must have been financially stable and viable prior to the current economic turmoil. Program details are still being finalized; the BDC has said that additional information will be made available in the coming weeks.

BCAP support: EDC guarantees

Under the expanded BCAP, the EDC will work with Canadian financial institutions to guarantee 75% of new operating credit and cash-flow loans provided to eligible companies. Such guarantees will range in size from $16.75 million to $80 million. To be eligible, EDC anticipates that that a company's annual revenues will need to be in the $50 million to $300 million range. Program details are still being finalized, and the EDC has said that additional information will be made available by early June.

The LEEFF Program

The Government of Canada has also announced that large Canadian employers may be eligible to receive bridge financing support under the new LEEFF program. The LEEFF will be aimed at ensuring eligible companies can keep their operations going, retain workers on payroll and avoid bankruptcy. The LEEFF program will be administered by the Canada Development Investment Corporation in cooperation with two federal government departments: Innovation, Science and Economic Development Canada and the Department of Finance.  

Eligibility

The following LEEFF eligibility criteria have been announced:

  • LEEFF relief will be available to for-profit businesses (with the exception of those in the financial sector) and certain not-for-profit businesses (such as airports), provided annual revenues are generally in the range of $300 million or higher;
  • Eligible businesses must be seeking financing of about $60 million or more;
  • Eligible businesses have significant operations or workforce in Canada;
  • Eligible businesses must commit to respect collective bargaining agreements and protect workers' pensions;
  • Eligible businesses may not be involved in active insolvency proceedings;
  • Cooperation of applicants' private sector lenders is required; and
  • If LEEFF support is received, the business will 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.

Additionally, 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.

Restrictions

Support under the LEEFF program will not be available to companies if:

  • The company has been convicted of tax evasion; and/or
  • The company has the capacity to "manage through the crisis" without LEEFF relief.

Companies that receive funding under LEEFF may not use it to resolve insolvencies or restructure firms, and the LEEFF program will require strict limits on dividends, share buy-backs and executive pay.

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