OTTAWA —
With more businesses moving out of hibernation, Prime Minister Justin Trudeau said the federal government will continue to roll out targeted financial assistance and expand existing commitments, saying that seeing as many Canadian businesses reopen as possible will be key to the overall economy’s well-being.
This comes with Wednesday’s double-barrelled announcement that large companies impacted by the current economic downturn can now apply to access multi-million dollar loans, and that landlords will soon be able to apply for the commercial rent relief program with the promise of a quick turnaround on funding.
These programs will roll out as more economic and social activities are being restarted because the pandemic curve is flattening across the country.
And while some restrictions are starting to be cautiously loosened, in many cases it doesn’t mean a return to business as usual, meaning that even though the gradual restart is “welcome news” as the prime minister said, it comes “not without its challenges.”
Many companies are facing a new reality, whether their workspaces need to be modified to contend with physical distancing requirements, having to find ways to make money while fewer customers are spending, or facing the challenge of purchasing new equipment to satisfy the heightened need for disease control measures, such as plexiglass barriers and face masks.
“People need help getting back on their feet,” Trudeau said. “Your business matters to your employees and to our country. In fact, it matters to our whole economy, so a concern for you is a concern for us too.”
He said getting the economy into better shape is going to hinge on as many businesses as possible making it through the pandemic.
“We know that if many businesses aren’t able to make ends meet and do go under at this point, it’ll be a lot slower to pick up the economy and that’ll be bad for Canadians,” he said.
Adding to this, Chief Public Health Officer Dr. Theresa Tam issued a new national stance on ongoing public health measures on Wednesday. She said that adherence to hand washing, physical distancing and cough etiquette will need to continue through the summer as the “bare minimum” efforts taken. She is also now recommending wearing non-medical masks any time physical distancing can’t be maintained.
She said that while this is not the “grand reopening” some Canadians may have hoped for, the precautions need to continue over the summer to buy Canada more time to prepare “whatever may come this fall and winter,” and to continue to research treatment and vaccine options.
LARGE FIRMS OFFERED BIG LOANS
Ahead of Trudeau’s address, Finance Minister Bill Morneau offered new details on the promised multi-million dollar loan program.
Called the Large Employer Emergency Financing Facility (LEEFF), big companies across most sectors will now be able to apply to access millions in additional liquidity to keep their operations going and avoid bankruptcy.
The program is intended to be a short-term offering until these firms can access traditional market financing, the government said Wednesday.
Eligible companies are those who can demonstrate having a “significant impact” on the Canadian economy, by having a large workforce or operation in Canada, and commit to keeping their domestic business activities alive with the assistance of the loan.
As already announced, eligible companies have annual revenues of $300 million or higher and are seeking loans of $60 million or more. Businesses in the financial sector are not eligible, nor are any firms convicted of tax evasion in the past. Morneau said there is no upper limit on these loans.
The loans are being offered for the next 12 months, and the size of each loan offered will vary on a case-by-case basis dependent on a businesses’ need.
The application process includes a non-disclosure agreement and companies can apply as long as the “current economic situation persists.”
The large loans come with a series of uniform terms and conditions that Morneau said are aimed at protecting Canadian taxpayers.
This includes agreeing to allow the government to take an ownership stake in publicly-traded companies. If not publicly-traded, then companies will have to put a up cash equivalent to ensure that existing lenders share in the risk.
Morneau said the intent of the conditions of the funding “is to make sure that if a firm does well that Canadians, and Canadian taxpayers share in that upside.”
In all cases, these companies will need to agree to a strict limit on their ability to issue dividend payments, share buy-backs, and capping executive compensation at $1 million.
Big businesses looking to secure this financial assistance also need to sign attestations committing to report annually on how their operations are supporting environmental sustainability and national climate goals.
The program is being delivered through a subsidiary of the Canada Development Investment Corporations.
Loans will be provided in tranches over the next year. The duration for the unsecured part of the loan will be five years, while the secured amount can be paid back at any time without penalty.
The program is aimed at helping smaller businesses cover their rents between April and June, and despite June rent due just days after the application portal is set to open, Trudeau is promising applicants will “receive your relief quickly.”
Commercial property owners are being offered forgivable loans to cover 50 per cent of three monthly rent payments. The loans will be forgiven if the property owner agrees to reduce eligible businesses’ rent by at least 75 per cent for the three months.
But because this program—established as a cost-sharing program with the provinces and territories—requires landlords agreeing to buy-in, it’s yet to be seen how many property owners may participate, but Trudeau had a message for them Wednesday: “If you’re a landlord, and you and your tenant are eligible, please apply.”
Questioned further on the incentive for landlords to take part, Trudeau said his government “expects” landlords to be part of the solution. He said that if businesses in their spaces go under, property owners will also be in a hard spot as more companies consider the viability of working from home or online commerce, therefore limiting the commercial space they need to rent.
ONGOING PUSH TO REHIRE
These financial aid programs are part of the government’s ongoing push to encourage employers to bring their employees back on the payroll, after two months of job losses prompted by the pandemic.
Between March and April approximately three million Canadians lost their jobs, and the unemployment rate has soared to 13 per cent, the second highest unemployment rate on record, according to Statistics Canada.
Last week, as part of the effort to kick-start the economic rebound, the government announced that the 75 per cent wage subsidy on employee salaries was being extended to the end of August. Trudeau continues to urge employers to rehire their staff and take the government up on this subsidy offer.
So far, more than 215,000 claims for the subsidy have been approved, with the government set to cover 75 per cent of the wages for nearly 2.8 million Canadians, a fraction of the take-up the government has anticipated.
On Tuesday the government also offered up interest-free loans of up to $40,000 to a wider range of business owners who may also need help reopening.
To-date the federal government has committed more than $150 billion in direct COVID-19 economic aid, while offering billions more in loans and other liquidity. More than 8 million people have now applied for the $2,000-per-month Canada Emergency Response Benefit and $38 billion has been sent to Canadians through this program.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
