• A loan guarantee will be in the form of a contract between the SPV, FNFA, as lender, and applicable government, as guarantor.
• The terms of the loan guarantee will be negotiated between the SPV, FNFA and the applicable loan guarantee body.
• FNFA expects it could make a claim under a government guarantee as soon as a
  default by the SPV occurs, or following, a short notice period.
• A review of the published terms of the federal and provincial Indigenous loan guarantee programs indicates only Ontario has a stated 90-day notice period before a claim under a guarantee is paid.
• When considering whether to make a loan to an SPV, FNFA will evaluate the government guarantee’s terms. If the terms of the guarantee improperly limit the ability of FNFA to rely on it, FNFA would not proceed with the loan.

• The eligibility criteria are purposefully intended to not be restrictive. If the SPV qualifies for a guarantee under an Indigenous loan guarantee program, then the SPV would generally be eligible for a loan from FNFA, subject to FNFA undertaking of its own due diligence in determining whether to issue the loan.
• The eligibility criteria for an SPV as outlined in the current proposed draft legislative amendments are as follows. Please note the amendments are subject to change as discussions are ongoing with CIRNA and other stakeholders such as the FMB.
  • A “qualified SPV” means a body corporate, corporation or limited partnership that is wholly owned, directly or indirectly, by one or more band(s) within the meaning of the Indian Act, First Nation(s) within the meaning of the Act, or Indigenous group(s) that is a party to a treaty, land claims agreement, self-government agreement with Canada.
    The Authority shall not make a loan to a borrowing member that is a qualified SPV unless the Authority is satisfied that
    • the borrowing member has the ability to repay the loan;
    • repayment of the loan is guaranteed by His Majesty or a Crown corporation.*
    • the borrowing member and the Authority have established a secured revenues trust account that is managed by a third party approved by the Authority and subject to terms that require the third party managing the account to periodically pay to the Authority the amounts required to be paid to it under the borrowing agreement with the borrowing member, at the times set out in that agreement, before paying any remaining amount to the borrowing member; and
  • The borrowing member has required the payers of the other revenues being used to secure the loan to deposit those other revenues into the secured revenues trust account or an intermediate account during the period of the loan.

*Note: the guarantee may be provided either by the Federal government, a province, a federal corporation or a provincial corporation.

• A partial governmental loan guarantee is sufficient for an SPV to be eligible for a loan from FNFA (i.e. a full loan guarantee is not required)
• FNFA will take into consideration the amount of the guarantee in determining whether to make a loan to an SPV.
• For context, a summary of the guarantee caps for Indigenous loan guarantee programs is found below:
  

  Indigenous Loan Guaranteed Programs	Investment Amount (Billions)	Criteria
  NAT: ILGP	10	The federal indigenous loan guarantee program (together with other federal sources) only guarantees up to 75% of the equity investment by an SPV, but does permit “stacking” with other provincial Aboriginal loan guarantee programs, so that the aggregate guarantee is 100% of the equity investment by an SPV
  AB: AIOC	3	The AIOC will support ICs’ investment in natural resource projects and related infrastructure in the energy (both renewable and non-renewable sectors), mining and/or forestry industries. Project proposals require a minimum aggregate IC investment of $20 million. Projects located in Alberta and in other provinces are eligible for AIOC support. Indigenous groups outside of Alberta are eligible for AIOC support by partnering with one or more Alberta ICs that have at least 25% of the total combined Indigenous ownership of a project.
  BC: BCLGP	N/A	Program parameters not yet published
  SK: SIIF	5 million	Who can apply? A Saskatchewan First Nation or Tribal Council An economic development corporation that is owned by Métis Nation – Saskatchewan, Métis Nation – Saskatchewan Region, or Métis Nation – Saskatchewan Local An economic development corporation owned by a self-declared Northern Métis municipality in Saskatchewan that has a board of directors, the majority of whom are registered members of Métis Nation – Saskatchewan Any other entity that demonstrates they fall within the mandate of the SIIFC A corporation wholly owned by an entity mentioned above
  MB	N/A	Program parameters not yet published
  ONT: ALGP	3	The $3 billion Aboriginal Loan Guarantee Program, now called Indigenous Opportunities Financing Program delivered under the Building Ontario Fund supports Indigenous participation in electricity infrastructure projects, including renewable energy infrastructure in Ontario (e.g., wind, solar and hydroelectric generation projects) and transmission projects. The program provides a Provincial guarantee for a loan to an Indigenous entity to finance a portion of its equity investment (typically about 75 per cent) in an eligible project. The program is available to entities that are wholly owned by Indigenous communities. The Ontario Financing Authority (OFA) administers the program on behalf of the province.

No. Due to the structural differences of the SPV and to avoid duplication of representatives from both an Indigenous group and an SPV owned by the same Indigenous group, SPV representatives would not be eligible to sit on the board of directors, nor would they vote in the election of the board of directors. They would also not be entitled to attend the Annual General Meetings of the Authority. However, Indigenous groups who own the SPV and are borrowing members of FNFA would continue benefitting from any rights provided to them under the Act.

No, there isn’t a predetermined number of First Nations that can collaborate in an SPV. The primary advantage of this initiative is the ability of FNFA to finance a single entity (the SPV) instead of multiple First Nation partners, which improves financing efficiency and streamlining the process.

In order for an SPV to obtain a loan from FNFA supported by a loan guarantee, do all the participating First Nations or Indigenous groups owning an SPV need to have

• have a Financial Administration Law (“FAL”) issued by the FMB and
• a Financial Performance Certificate (“FPC”) issued by the FMB?

No – Unlike loans made to First Nations, which require a FAL and FPC in conformity with FMB’s standards to ensure sound financial management and minimize the risks to FNFA’s borrowing pool, the structure of an SPV allows FNFA to lend directly to the SPV, and the government loan guarantee creates a safety net which largely reduces any risks of detrimental impact on the borrowing pool. One of the purposes of the SPV initiative is to provide affordable access to capital to more Indigenous groups. Those who have not gone through the traditional process to access FNFA financing (via FMB certification) can access it through an SPV, provided a loan guarantee is granted.

Yes, in a scenario where the SPV is participating in an equity partnership where there is a revenue guarantee, FNFA would consider financing. Revenue guarantees usually take the form of royalties or derived revenues (i.e. hydro contracts) from the equity partnership.

The governance of the SPV will determine the terms and conditions of participation, including the wishes of any participant to leave the SPV. They would require the consent of all SPV members and need to determine who would take on their portion of the debt/equity. However, an SPV that is a borrowing member of FNFA with an unpaid loan could not change its ownership without the prior written consent of the Authority, to ensure it remains a “qualified SPV” and wholly owned by Indigenous groups.

No. There is no predetermined limit on the amount of financing that can be accessed through FNFA. It is important to note, however, that under Canada’s Indigenous Loan Guarantee Program, the minimum guarantee threshold is $20 million and the maximum loan guaranteed threshold is $1 billion, subject to review/adjustments over time. Other governmental loan guarantees may also have determined loan guarantee thresholds.

Yes, the expectation is that the SPV will participate in all risk mitigation activities, including contributions to any established funds. As well, if the SPV has obtained a loan from FNFA, it will only be able cease being a borrowing member with the consent of all other borrowing members.

Intervention by the FMB will not apply to SPVs.

Yes, the relevant section of the Act providing for FNFA’s priority would apply to an SPV that is a borrowing member.