Archived — Structured Financing Facility

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The Structured Financing Facility (SFF) has funding until March 2013.

Applications will be accepted until March 31, 2013. For vessels or offshore marine structures that are scheduled for construction and delivery after March 31, 2013, project consideration will be subject to the availability of funds (in addition to the other SFF criteria) (updated as of November 5, 2012).

Eligibility Criteria

The applicant must be a purchaser or lessee of a vessel or offshore marine structure. The payment for the newly built or modified vessel or offshore marine structure must be financed by a lender or lessor who will receive the SFF contribution to reduce the applicant's interest or leasing costs.

What are the eligible products?

Eligible products are new vessels or offshore marine structures and existing vessels and offshore marine structures undergoing major refurbishment, conversion or other major modification and constructed in Canada. The following additional criteria apply:

  • The shipyard must be in Canada on a water way accessible to ocean-going traffic.
  • The vessel is not constructed mainly of wood or fibreglass and is not a wind powered craft.
  • The vessel is at least 25 metres in length.
  • The price paid for the shipyard work is at least $5 million.
  • The vessel is solely intended for commercial use and not any private use.
  • If it is a marine structure, it must be one used in the development or exploitation of offshore oil, gas and/or mineral resources.
  • Vessels or marine structures that will be constructed and delivered by March 31, 2013 will be considered according to existing SFF criteria. However, for vessels or offshore marine structures scheduled to be constructed and delivered after March 31, 2013, project consideration will be subject to the availability of funds (in addition to other SFF criteria) (updated as of November 5, 2012).

Pleasure craft, as defined in the Canada Shipping Act, are not included.

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SFF Description

The SFF provides financing support in the form of a buy-down of financing costs. Subject to the limitations below, this support can be up to 15 percent of the purchase price paid to the Canadian shipyard for the construction or modification of an eligible vessel or offshore marine structure. The support is in the form of a non-repayable contribution.

The financing support is subject to the following limitations:

  • The buy-down of interest or leasing costs cannot exceed 75 percent of total interest or leasing costs.
  • If the vessel or offshore marine structure is for export, and a fixed-rate loan is used to finance the acquisition or modification, then the interest rate of the loan cannot normally be bought down below the Commercial Interest Reference Rate (CIRR) as defined by the Organisation for Economic Co-operation and Development (OECD).

For Canadian applicants, the Canadian income tax regulations remove the right to accelerated capital cost allowance for vessels whose construction or modification was supported by SFF.

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Application Process

An applicant provides a project outline to Industry Canada with the following information:

  • company information —name of company, address, contact person, preferred language of communication;
  • company profile—ownership and organization (legal status), brief summary of company history nature of business, most recent financial statements;
  • proposed project—what type of vessel or offshore marine structure is being purchased/modified, which Canadian yard, the overall costs, proposed financing arrangements, proposed contracts for use and destination of vessel, timing of the project;
  • market—where the vessel will be used;
  • competition—which shipyards are competing for the construction of the vessel, what is the price differential amongst the alternative shipyards;
  • need—justification as to why SFF support is needed for the project to proceed in Canada with the desired scope and timing;
  • benefit to Canada—outline benefits such as jobs created in Canada both in the construction of the vessel and in its use, identify any design or development that may be required, technology transfers, etc.

The Minister of Industry Canada shall have the sole discretion to determine the acceptability of an applicant, a recipient, a lender or lessor, and a shipyard; the Minister may, from time to time, make policies regarding acceptability.

Industry Canada will assess the above information and provide the applicant within a few weeks with an indication of whether the proposed project is eligible under the SFF. If the project appears to be eligible, the Department will inform the applicant of any additional information that may be required in order for the Department to proceed with a full analysis and obtain the appropriate approval authorities.

If the project is approved, the recipient will be requested to submit data, schedules, plans and reports in sufficient detail to enable the Minister to:

  1. assess the progress of the project;
  2. carry out the post-completion monitoring called for in the contribution agreement.

Contacts:

Sharon Irwin
A/Director, Defence and Marine Directorate
Aerospace, Defence and Marine Branch
Industry Canada
235 Queen Street
Ottawa, Ontario K1A 0H5
Email: Sharon Irwin

Phil Mickle
Senior Sector Development Officer
Defence and Marine Directorate
Aerospace, Defence and Marine Branch
Industry Canada
235 Queen Street
Ottawa, Ontario K1A 0H5
Email: Phil Mickle

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