Canadian Government Provides Guidance on LEEFF Program

The federal government first announced its Large Employer Emergency Financing Facility (LEEFF) program on May 11, 2020.  The goal of this program is to provide bridge financing to large Canadian employers affected by COVID-19 whose needs are not met through conventional financing, thereby helping them to protect jobs, weather the current economic downturn, remain active, and avoid bankruptcies. On May 20, 2020, the Canada Development Investment Corporation (CDEV) clarified a number of factors relating to the LEEFF program, including those relating to the application process, the terms and conditions of a LEEFF loan, and compensation to Canada Enterprise Emergency Funding Corporation (CEEFC). 

The application process

There is no deadline to apply for LEEFF; the program will remain open while the current economic situation persists.  Applicants are required to register their interest in obtaining a LEEFF loan at  A CEEFC representative will then send the applicant a nondisclosure agreement, application form, and instructions.  Representatives of CEEFC and Innovation, Science and Economic Development Canada (ISED) will then contact the applicant to begin the process.

Terms and conditions of the loan

The terms and conditions of a LEEFF loan are commercial in nature. Key terms include: 

Minimum principal amount and how the loan will be advanced and provided

The minimum aggregate loan will be $60 million.  Loans will be advanced in tranches over 12 months, and provided by two loan facilities:

  • An unsecured facility equal to 80% of the aggregate loan, and
  • A secured facility equal to 20% of the aggregate loan amount

Interest Rate

Unsecured facility

The interest rate on the unsecured facility will be cumulative at 5% per annum payable quarterly in arrears. It will increase to 8% per annum on the loan’s one-year anniversary and 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.

Secured facility

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


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


While the loan is outstanding the borrower will be subject to certain operating requirements, including:

  • Prohibitions on dividends, capital distributions, and share repurchases, and
  • Certain executive compensation restrictions


As noted in our original ASAP about the LEEFF program, while the loan is outstanding, the borrower will be subject to affirmative covenants, including:

  • Performance of obligations under existing pension plans;
  • Performance of material obligations under applicable collective bargaining agreements; and
  • 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 board of the borrower.

Satisfaction of conditions before advance of funds

Before the initial advance of funds, certain conditions will need to be satisfied, including existing lenders or bondholders of the borrower providing waivers.

Compensation of CEEFC

In addition to the security interest on the secured facility and the interest rate charged for the LEEFF loans, borrowers will be required to provide additional compensation to CEEFC for the loans.  The nature of the compensation will depend on whether the borrower is a public company or a private company. 

Public company

If the borrower is a Canadian public company or the private subsidiary of a Canadian public company, the borrower must issue warrants to CEEFC that provide CEEFC with the option to:

  • Purchase the borrower’s (or the parent public company’s) common shares totalling 15% of the principal amount of the LEEFF loan, or
  • 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

A borrower that does not have publicly traded shares will be required to compensate CEEFC in the form of additional fees at a level commensurate to the value of the warrants for public company borrowers. 

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.