COMMISSION POLICY REGARDING DOCUMENTARY EVIDENCE TO CONFIRM THE AVAILABILITY OF FINANCING
As a general policy, the Commission will consider a broadcasting application (radio network applications exempted) to be incomplete unless it contains documentary evidence confirming the unequivocal availability of each source of funding as required and identified in an applicant's business plan.
DOCUMENTARY EVIDENCE:
1.0 Commercial lending (financial) institutions
1.1 General
Funding must come from a recognized domestic or foreign commercial lending Institution (Institution). [note: The Commission reserves the right to request audited financial statements of the Institution].
Letters from an Institution indicating its interest in providing financing or referring to its knowledge of the borrower together with a statement to the effect that in the Institution's opinion the securing of the required funding will not be a problem, will not be considered by the Commission as constituting appropriate documentary evidence.
1.2 Existing credit facilities
In the case where use of already-established credit facilities is contemplated, the applicant must file a letter signed by an officer of the Institution.
The letter, on the Institution's letterhead, must be dated no more than six months prior to the date the application is filed with the Commission.
The letter must include the following as a minimum:
- The name of the borrower;
- A confirmation as to the existence of the credit facility;
- The unused balance of the credit facility [note: in Canadian dollars], as at the date of the letter; and
- The amount of the unused balance above available to the borrower for the purposes contemplated in the application (e.g.: to provide equity capital).
The applicant must also file a letter from the borrower confirming her/his intent to use the credit facilities referred to above.
1.3 New credit facilities
In the case where the use of a new credit facility is contemplated, the applicant must file a letter signed by an officer of the Institution.
The letter, on the Institution's letterhead, must be dated no more than six months prior to the date the application is filed with the Commission and must be countersigned by the borrower indicating her/his acceptance of the credit facility being offered. [note: see sample wording appended].
The letter must include the following as a minimum:
- The name of the borrower;
- The type of facility being offered (e.g.: demand or term loan, capital lease, line of credit, mortgage etc.);
- The amount [note: in Canadian dollars] of the credit facility; and
- Separately, all of the terms, conditions, collateral security etc. of the facility. This must include as a minimum the following:
(a) the interest rate;
(b) the terms of repayment;
(c) the security required; and
(d) all positive and negative covenants and restrictions.
If one or more of the terms, conditions or covenants above constitute a prerequisite requirement by the Institution (e.g.: financial statements, legal opinions, prerequisite funding, life insurance etc.), the applicant must also provide a complementary letter from the Institution confirming that all such requirements have been met and that, accordingly, the credit facility being offered is available unconditionally.
2.0 Existing resources
2.1 General
In the event the use of existing financial resources is contemplated, the following guidelines apply.
2.2 Incorporated entities
In the case where the applicant and/or principal is an entity incorporated under the laws of Canada, its provinces or territories, a copy of the applicant's and/or the principal's audited financial statements must be filed with the application. Subject to the provisions set out in section 2.4 below, the audited financial statements must be for a twelve-month period ended no more than six months prior to the date the application is filed with the Commission.
2.3 Private persons
In the case where the applicant and/or principal is a private person, a copy of the applicant's and/or the principal's audited personal financial or net worth statements must be filed with the Commission.
Subject to the provisions set out in section 2.4 below, the audited personal financial statements must be for a twelve-month period ended no more than six months prior to the date the application is filed with the Commission.
In the case of net worth statements, these must be for a twelve-month period ended no more than three months prior to the date the application is filed with the Commission. Further, a net worth statement must be sworn by the applicant and/or principal or notarized declaring that the information contained in the net worth statement is, to the best of the applicant's and/or principal's knowledge and belief, true and correct in all respects.
2.4 Periods ended beyond six months
In those instances where the audited financial statements referred to above are for a twelve-month period ended more than six months prior to the date the application is filed with the Commission, a copy of the audited financial statements must be filed together with a copy of non-audited interim financial statements, signed by an authorised officer of the company, for a period ended no more than six months prior to the date the application is filed with the Commission.
2.5 Other
The financial and net worth statements referred to in this section must indicate a level of liquid assets equal to or greater than the amount of financing for which the financial or net worth statements have been filed.
2.6 Liquid assets
Liquid assets are defined as current assets less current liabilities (i.e.: working capital) adjusted to exclude those assets readily identified as already encumbered (e.g.: security for a loan), and those assets which, for certain reasons (e.g.: fiscal considerations), would not normally be expected to be available for liquidation. (e.g.: paid-up value of whole-life insurance policies, RRSPs, RRIFs, etc.)
3.0 Floats
3.1 Private placements
In the case where a private placement of equity instruments (i.e.: common or preference shares) and/or money-market instruments (e.g.: bonds, debentures etc.) is contemplated, the applicant must provide the Commission with the following as a minimum:
- A copy of a duly executed deed or indenture governing the instrument in question;
- A letter, obtained from each investor or lender, confirming their intent to provide funding to the applicant. This letter must identify the dollar amount [note: in Canadian dollars] of the investment or loan and, as appropriate, the number and type of units or shares being acquired; and
- A financial statement or net worth statement, as described in section 2.0 above, obtained from each investor or lender.
3.2 Public issues
In the case where a public float of equity instruments (i.e.: common or preference shares) and/or money-market instruments (e.g.: bonds, debentures etc.) is contemplated, the applicant must provide the Commission with the following as a minimum:
- A copy of the applicable deed or indenture governing the instrument in question; and
- A letter obtained from a recognized brokerage house or investment dealer (dealer) confirming the latter's acquisition of the entire float for its own account or, acting as a head of a syndicate, on behalf of the syndicate's accounts (i.e.: bought deal). This letter must identify the dollar amount [note: in Canadian dollars] of the investment or loan and, as appropriate, the number and type of units or shares being acquired.
[note: the Commission does not consider public floats done on a best efforts basis as sufficient evidence of financing].
Letters from a dealer indicating its knowledge of an applicant (or its principals) together with a statement to the effect that in the dealer's opinion, the securing of the required funding will not be a problem, will not be considered by the Commission as constituting appropriate documentary evidence.
4.0 Government assistance
4.1 General
In certain cases, financial assistance from various government departments and agencies may be contemplated. Such assistance may take the form ranging from loan guarantees to straightforward grants. Such assistance may cover an indefinite period of time or may represent a "one-time" contribution.
4.2 Loan guarantees
As loan guarantees normally represent one of possibly several positive covenants governing a commercial loan, documentation confirming such guarantees is not, by itself, considered as appropriate documentation.
4.3 Grants etc.
Straightforward monetary grants should be supported by a letter, on departmental letterhead, signed by an official involved. The letter should indicate the amount of the grant, as well as any and all conditions attached thereto.
5.0 Confidentiality
Where confidentiality under Section 20 of the CRTC Rules of Procedure is requested on any financial statement or statement of net worth referred to above, the applicant and/or principal, in addition to the statements filed, must obtain and submit the attached Attestation.
ATTESTATION
Institution's Letterhead
CRTC Application No.:
"I/We, (name of attesting individual/firm), have knowledge of the financial affairs of (name of person/entity to whom the confidentiality request pertains) and have examined the (specify the information examined, i.e.: net worth statement, financial statements, etc. to which the confidentiality request pertains) of (name of person/company) dated (date). Based on my/our examination it is my/our opinion that (name of person/company to whom the confidentiality request pertains) has the financial capacity to invest (amount of the proposed investment) in the proposed undertaking, namely: (name of undertaking). I/We understand if the Commission accords confidentiality to the subject material then this letter will form part of the application and will be made available for public inspection."
Note To be completed by an accredited accountant (i.e. CA, CMA or CGA) or authorised officer of a financial institution, brokerage house or investment dealer.
Signature
Position
Firm
Date
SUGGESTED WORDING IN THE CASE
OF NEW CREDIT FACILITIES
Institution's Letterhead
CRTC Application No.:
Offer:
" We have examined the business plan and related financial projections of (name of applicant) related to the application before the Commission for a licence to provide (type of service) to (name of location) and subsequent to a favourable decision by the Commission we are prepared to provide, (name of borrower) financing in the amount of ($x CDN) under the following terms, conditions and security (clearly specify all terms, conditions and security required by the Institution), for the purpose of (purpose of credit)."
(Signature of authorising office) (date)
Acceptance:
"I, (name of borrower), have read and understand the terms, conditions and security of the credit facility outlined above and hereby indicate my acceptance of same."
(Signature of borrower) (date)
Date Modified: 2002-07-25
- Date modified: