Ottawa announces support for large businesses affected by COVID-19, with strict conditions

The federal government is providing new financing to help large businesses get through the coronavirus pandemic.

The Large Employer Emergency Financing Facility (LEEFF) will provide bridge financing to the country’s largest employers, those with sales of at least $300 million a year. It’s intended for companies unable to access capital through conventional financing, with the goal of protecting jobs and businesses.

The government did not say how much the bridge financing program would cost.

“These companies employ millions of Canadians and provide for families across our country,” said Finance Minister Bill Morneau during a news conference.

The federal government says LEEFF is intended for companies, in all sectors except the financial sector, that were performing well before the crisis. It’s not for companies trying to avoid insolvency.

The financing will come with conditions. Companies will be required to have a large footprint in Canada and show how a plan to maintain employment. They will also be subject to environmental assessments and conditions.

“The money is intended for firms that need it. It’s not low cost lending for those who don’t need it. Nor is it to rescue companies that were already facing insolvency before this crisis,” said Morneau.

“It’s there to make sure that companies that came into the crisis on strong footing get to the other side and can rebound quickly.”

There will be strict limits on dividends, share buy-backs, and executive pay. Companies convicted of tax evasion will be disqualified. Collective bargaining agreements, including pensions, will have to be respected.

Prime Minister Justin Trudeau says the government will protect workers and hold companies accountable. He says enforcement details are to come.

“Let me be clear, these are bridge loans, not bailouts,” said Trudeau during his daily COVID-19 update.

“Just as we are finding ways to support small and medium-sized businesses, we’ll provide loans to the largest enterprises to weather the storm and protect the millions of jobs they provide across Canada.”

He also says he prefers businesses seek financing through their financial institutions, but that the federal government is a lender of last resort.

Ottawa is also expanding the the Business Credit Availability Program (BCAP) for mid-sized businesses. Those businesses can get loans of up to $60 million and guarantees of up to $80 million through Export Development Canada (EDC) and the Business Development Bank of Canada (BDC).

The Business Council of Canada says it welcomes the measures as first steps, but looks forward to seeing more details.

“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,” said Goldy Hyder, President and CEO of the Business Council of Canada, in a statement.

“They are world leaders when it comes to sustainable environmental practices, corporate governance
and corporate social responsibility.”

Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.

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