New program for Canadian businesses: Large Employer Emergency Financing Facility (LEEFF)

On May 11, 2020 the federal government announced a new program that is meant to provide bridge financing of at least $60 million to large employers. Few details have been provided on the Large Employer Emergency Financing Facility (LEEFF) program and below is what has been announced to date.

Who is eligible for LEEFF?

Few specific details have been provided as to who will be eligible, however, the types of entities that are currently eligible are:

• Large for-profit businesses in all sectors (except the financial sector), and
• Certain NPOs. No further details on what types of NPOs would be eligible vs. those that would not be, other than airports being an example.

These are the currently known requirements to be eligible:

• Annual revenues of $300 million or more
• Seeking “about” $60 million or more of financing (the “about” suggests it could potentially be less and the government has not set a specific threshold yet)
• Has significant operations or workforce in Canada, which suggests that it could be one or the other
• Not be involved in active insolvency

It is not yet clear if all the eligibility requirements would apply to both for-profit entities and NPOs, however, it does appear that the $300 million annual revenue requirement would apply to both.

Who is not eligible for LEEFF?

The government has stated the program would not be available to:

• Companies in the financial sector, or
• Companies convicted of tax evasion.

How does LEEFF work?

The purpose of this program is to provide liquidity to large employers with a “significant footprint” in Canada by providing funding to firms that need it as a result of the economic downturn caused by COVID-19. The government has specifically stated  this is not meant to provide low-cost lending to firms, nor to rescue companies that were already facing insolvency prior to the pandemic.

Companies that apply for LEEFF will be required to:

• Respect Collective Bargaining Agreements, including pensions,
• Follow strict limits on:
  • Executive pay,
  • Share buybacks, and
  • Dividends, and
• Commit to publishing future climate disclosure reports consistent with the Financial Stability Board’s Task Force on Climate-related Financial Disclosures, as well as provide details of how future operations will support environmental sustainability goals and national climate goals.

How to apply for LEEFF

Few details are currently available on how an entity that qualifies will be able to obtain the financing facility. What is known is that the program will be delivered by the Canada Development Investment Corporation (CDEV), in cooperation with Innovation, Science and Economic Development Canada and the Department of Finance.

Additional information

For further details on this program, please see the Prime Minister’s website that provides some limited details.