Aid unveiled for oilsands, airlines, tourism,

SUPPORT FOR OIL AND GAS, AIRLINES AND TOURISM SECTORS APPLIES TO COMPANIES WITH MORE THAN $300M IN REVENUES

OTTAWA • The Liberal government unveiled its long-awaited relief program for companies in hard-hit sectors such as oil and gas, airlines and tourism, more than a month after Ottawa first indicated new supports were on the way.

Finance Minister Bill Morneau announced the Large Employer Emergency Financing Facility (LEEFF) for companies with annual revenues of more than $300 million, the latest in a string of federal programs aimed at sheltering firms from the economic fallout caused by COVID-19.

The LEEFF will provide lines of credit to larger companies, with some limits around dividends and executive pay, as well as disclosure requirements for climate change-related risks.

Details on the program were sparse on Monday. Industry groups and provincial leaders were largely supportive of the LEEFF, but said its tardy rollout could have stunted its usefulness to cashstrapped companies.

“We would have been really happy if this announcement would have been made a month ago,” Alberta Finance Minister Travis Toews said Monday. “We had been advocating really for a couple of months for this type of liquidity measure.”

Prime Minister Justin Trudeau attempted to frame the credit facilities as “bridge loans, not bailouts,” after he faced pressure in recent weeks to avoid any financial supports for the oil and gas sector. Those pressures peaked when Green Party leader Elizabeth May on Wednesday said “oil is dead” and called on Ottawa to scrap any plans to support fossil fuel companies, prompting a backlash in Alberta and Saskatchewan.

The Trudeau government has long sought to strike a political message that balances energy and the environment, a position that has caused some division within the Liberal caucus.

Executives and industry groups on Monday were supportive of the new measures announced by Ottawa, saying it will fill a vital gap as liquidity in the sector evaporates. Some are now looking further down the road, suggesting Ottawa could begin investing directly in emissions-reducing technologies like geothermal, hydrogen, and carbon capture and storage, as a way to initiate a long, slow shift within the industry.

“The liquidity piece is there,” said Kevin Krausert, president and CEO of Calgary-based Beaver Drilling. “But I think the next step needs to be stimulus funds for energy diversification. We recognize that the energy industry is going to be much different going forward, but where’s the capital for us to kickstart that program?”

Representatives with the airline industry also supported the program, but said the eligibility requirements could seriously restrict its uptake in the sector.

“We hope that this was just the first phase of aid available to our industry,” the Air Transport Association of Canada said in a written response to questions.

Roughly 75 per cent of the association’s members fall below the $300 million thresholds under LEEFF, and so will not be eligible for the program.

Others worried that new programs offering credit will only add to the monstrous volumes of debt companies have already taken on during the COVID-19 pandemic, causing companies to become over leveraged.

“While the LEEFF is a good step forward, businesses are hesitant to take on more loans and debt during these uncertain times,” said

Dennis Darby, president and CEO of Canadian Manufacturers & Exporters

“CME has called for non-repayable measures to help businesses with cash flow during these challenging times.”

The Canadian Association of Petroleum Producers said it was “still waiting for more details about the rollout of the program,” but said it was “critical at this time for major employers to survive and keep Canadians employed.”

The LEEFF program will be delivered through the Canada Development Investment Corporation (CDEV), with support from the federal departments of innovation and finance. It will target companies seeking $60 million or more in available credit.

Firms are now awaiting further details on eligibility requirements, restrictions around share buybacks, executive pay and other aspects of the program that remain uncertain.

Ottawa on Monday also expanded its existing Business Credit Availability Program, which will now accept loans up to $60 million and guarantees up to $80 million.

Conservative leader Andrew Scheer said the Liberal package does not go far enough to stem the financial pain in the energy sector, which has been pummelled by one of the deepest oil routes in history.

“Mr. Morneau promised an industry-specific package to the oil and gas sector would address the very, very unique set of circumstances and the very specific challenges that the sector is facing,” he said.

In a joint statement, Conservative members of Parliament Pierre Poilievre and Michelle Rempel Garner said the program came more than a month after it was initially promised, and still lacks essential details.

“Nothing announced today provides the clarity that businesses and workers have been looking for. There are no clear timelines, no clear eligibility criteria, no job guarantees, no budget, no transparency and no safeguards to protect taxpayers.

Morneau had said in March that supports for the energy sector would be unveiled in “days,” but it was some weeks before Ottawa announced its first industry-specific aid package, which included $1.7 billion in funding to clean up abandoned oil and gas wells.