Finance Minister Bill Morneau said the conditions will be the same for any business seeking assistance under the program which opens today.
He says the conditions are designed to ensure that companies using the program receive bridge loans, not bailouts, to overcome the economic disruption of COVID-19.
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Companies listed on the stock exchange or their private subsidiaries will have to issue warrants giving the government the option of buying shares representing 15% of the loan or receiving the cash equivalent. Private companies will pay the same in fees, says Morneau.
“The idea behind the mandate is to ensure that if the business is successful, Canadians and Canadian taxpayers share this advantage,” he said.
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“The Canadian government will not be required to take this stock, it can take it in cash.”
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The Liberals said the loans would be made on commercial terms and would force companies to go to banks or the market without being able to meet their financial needs.
Recipients should also agree to limit executive compensation, dividend payments and share buybacks, and show that they contribute to the Liberals’ goal of reducing greenhouse gas emissions.
The loans would start at $ 60 million with no upper limit, Morneau says, and would target businesses with revenues of at least $ 300 million.
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Morneau says the loan program for Canada’s largest companies is to keep them open and keep their employees on their payroll and avoid bankruptcies of otherwise viable businesses, as much as possible.
Interest will be set at 5% in the first year, increasing to 8% in the second year and 2% per year thereafter. Program terms posted online indicate that businesses can repay interest on the loan through in-kind contributions, usually goods or services, during the first two years of the loan.
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“What we have done here is to make sure that we provide a low level of interest in the first year, but this is appropriate for employers looking for it to turn to their own first sources of funding, ”said Morneau during a morning. press conference in Toronto.
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