Brookfield, EDC partner on fund for restructuring firms

Export Development Canada and Brookfield Asset Management Inc. have partnered on a $550 million fund to extend credit to struggling Canadian companies.

The Crown corporation has put up $450 million and Toronto-based Brookfield another $100 million into the fund that the two parties expect will grow to $1 billion. Initial investors also include the Canadian Imperial Bank of Commerce and Sun Life Financial Inc., although the amount of the financial commitment to the fund from the latter two is unknown at this time.

The fund will provide debtor-in-possession (DIP) loans to Canadian companies. DIP financing provides companies seeking protection from creditors with capital to continue to operate their business while they restructure.

"This fund will help Canadian companies gain access to credit during restructuring, when it's most needed," EDC chief executive officer Eric Siegel said in a statement.

"This new partnership with Brookfield enables us to further assist even more Canadian companies during the current downturn."   

The fund will target mid-size and larger companies that have credit needs in excess of $20 million.

Brookfield managing partner Joe Freedman said the available financing will help "viable enterprises emerge from the current recession in a strong competitive position."

Investing in assets undergoing turmoil is nothing new for Brookfield. Last week, the company unveiled a $4-billion US consortium aimed at distressed real estate.

Credit conditions have been easing in Canada in the past few months, but the July survey of senior fund managers by the Bank of Canada found conditions remained tighter than normal.