FILE – Minister of Finance Bill Morneau responds to a question during a news conference in Ottawa, Friday, March 27, 2020. THE CANADIAN PRESS/Adrian Wyld

Feds to seek equity or cash from companies applying for new COVID-19 loan program

Terms are designed to make sure companies using the program receive bridge loans, not bailouts

Large companies that receive bridge financing through a new federal loan program will have to give the government the option to take an ownership stake, or provide a cash equivalent.

Finance Minister Bill Morneau says the terms will be the same for any company asking for help through the program that opens for applications today.

He says the terms are designed to make sure companies using the program receive bridge loans, not bailouts, to get through COVID-19’s economic disruptions.

The Liberals have said the loans would be on commercial terms, and require companies to have already gone to banks or the market and been unable to meet their financial needs.

Recipients would also have to agree to limits on executive compensation, dividend payments and share buy-backs, as well as show they are contributing to the Liberals’ goal of reducing greenhouse-gas emissions.

Morneau says the loan program for Canada’s largest corporations is so they can stay open and keep employees on their payrolls and to avoid bankruptcies of otherwise viable firms, wherever possible.

The Canadian Press

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