LEEFF Loan To Sunwing Protects Canadian Jobs
The Canada Enterprise Emergency Funding Corp. (CEEFC) released details of a new loan — under the Large Employer Emergency Financing Facility (LEEFF) – that will see Sunwing Vacations Inc. and Sunwing Airlines Inc. given access to $375-million of liquidity to protect jobs in Canada’s airline sector.
Together, Sunwing Airlines and Sunwing Vacations provide close to 3,000 Canadians with full-time jobs.
Sunwing has agreed to maintain an account with money received from customers for travel that was cancelled due to the COVID-19 pandemic.
This account will be maintained until the government’s broader discussions with the airline industry conclude and a policy is established for the treatment of these prepaid amounts.
LEEFF loans provide bridge financing to Canada’s largest employers whose needs during the pandemic are not being met through private market financing. It provides large Canadian employers with access to credit to preserve jobs and continue operations during this challenging period.
Other applications for LEEFF financing are currently under consideration.
To protect the financial interests of taxpayers, rigorous due diligence and the collaboration of existing lenders is required.
CEEFC maintains an updated list of approved LEEFF loans, which can be found at https://www.ceefc-cfuec.ca/approved-loans/.
Key terms of the LEEFF loan facility can be found at https://www.ceefc-cfuec.ca/leeff-factsheet/.
A Little Background
- LEEFF is open to all large, for-profit Canadian employers who have a significant impact on Canada’s economy and provide millions of jobs to Canadians. Companies in the financial sector are not eligible for LEEFF. In order to qualify for LEEFF, a company must have more than $300 million of annual revenues and require a loan of at least $60 million.
- Certain not-for-profit enterprises, such as airports, may also be eligible. Any company that has been found guilty of tax evasion is not eligible.
- Companies that receive a loan through LEEFF are 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.
- Companies must agree to sustain their domestic operations, make reasonable commercial efforts to minimize the loss of jobs, and demonstrate a clear plan to return to financial stability. They must also agree to place restrictions on executive compensation, dividends, and share buybacks.
- As this program is intended to be a lender of last resort, applicants may be concurrently examining other financing opportunities. Applicant information is disclosed only if LEEFF loans are approved.