Canada Development Investment Corporation Clarifies Certain Aspects of the Large Employer Emergency Financing Facility Program

May 22, 2020

On May 20, 2020, Canada Development Investment Corporation (CDEV) clarified certain aspects of the Large Employer Emergency Financing Facility (LEEFF) program which was announced by Canada’s federal government on March 11, 2020, including (i) the terms and conditions that would apply to the loans provided to large Canadian businesses under the LEEFF program and (ii) the compensation payable by such businesses in exchange for the loans provided under the LEEFF program.  

The following is a summary of the material terms of the LEEFF program. The information below is based on press releases issued on May 11, 2020 by each of the Prime Minister’s office (here), the Business Development Bank of Canada (here) and the Export Development Canada (here), as well as a factsheet issued on May 20, 2020 by CDEV (here).


The Government of Canada has created the LEEFF program pursuant to which large Canadian employers may be eligible to receive bridge financing support. The LEEFF program will be aimed at ensuring eligible companies can continue their operations, retain workers on payroll and avoid bankruptcy. The LEEFF program will be administered by the Canada Enterprise Emergency Funding Cooperation (CEEFC), a subsidiary of CDEV, in cooperation with two federal government departments: Innovation, Science and Economic Development Canada and the Department of Finance.  

LEEFF 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 must have significant operations or workforce in Canada and must commit to sustain their domestic business activities;
  • Eligible businesses may not be involved in active insolvency proceedings;
  • Cooperation of applicants’ private sector lenders is required;
  • Eligible businesses must commit to minimizing the loss of employment; and
  • Eligible businesses must demonstrate that funding under LEEFF forms part of their overall plan to return to financial stability.

Additionally, in considering a company’s eligibility for 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.

LEEFF 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 the funding proceeds to resolve insolvencies or restructure firms. Further, while the loan is outstanding, the borrower will be subject to certain operating requirements, including prohibitions on dividends, capital distributions and share buy-backs, as well as executive compensation restrictions.

Loan Terms

The key terms and conditions of the loans to be provided to eligible companies under the LEEFF program are as follows:

Principal amount

The minimum aggregate loan will be $60 million. The loan will be provided by way of two loan facilities: (i) an unsecured facility equal to 80% of the aggregate loan amount, and (ii) a secured facility equal to 20% of the aggregate loan amount. The loan will be advanced in tranches over 12 months.

Interest rate

With respect to the unsecured facility, the interest rate will be cumulative at 5% per annum payable quarterly in arrears. The interest rate will increase to 8% per annum on the one-year anniversary and will increase by a further 2% per annum each year thereafter. To reduce cash pressures, interest may be paid in-kind for the first two years of the loan.

For the secured facility, the interest rate will be based on the interest rate of the borrower’s existing secured debt.


The duration of the unsecured facility will be five years. The duration of the secured facility will match that of the borrower’s existing secured debt. The borrower may prepay the loan at any time without penalty.


The borrower will be subject to certain affirmative covenants while the loan is outstanding, including (i) performance of obligations under existing pension plans, (ii) performance of material obligations under applicable collective bargaining agreements, and (iii) publishing an annual climate-related financial disclosure report, highlighting how corporate governance, strategies, policies and practices will help manage climate-related risks and opportunities, and how these practices contribute to achieving Canada’s commitments under the Paris Agreement and goal of net zero emissions by 2050.


CEEFC will reserve the right to appoint an observer to the borrower’s board.

CEEFC Compensation

Businesses that receive loans under the LEEFF program will be required to compensate CEEFC in exchange for such loans. The compensation required is dependent on whether the borrower is a public or private company.

Public companies

In addition to the security interest on the secured facility and the interest rate charged for the loans, if the borrower is a Canadian public company (or the private subsidiary of a Canadian public company), the borrower must issue warrants to CEEFC. The warrants must provide CEEFC with the option (i) to purchase the such number of the borrower’s (or parent public company’s) common shares as is equal to 15% of the principal amount of the loan provided under the LEEFF program or (ii) to receive cash consideration equivalent to the value of the warrants. These warrants may be settled with the borrower prior to being exercised or sold to third party buyers after the loan is repaid.

Private companies

In addition to the security interest on the secured facility and the interest rate charged for the loans, borrowers without publicly-traded shares will be required to provide CEEFC with compensation in the form of additional fees at a level commensurate to the value of the above-mentioned warrants for public company borrowers.

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