Treasury's Fifth Report Under Section 4026(b)(1) of the CARES Act

Summary

A U.S. Department of the Treasury report under Section 4026(b)(1) of the CARES Act; it is Treasury's fifth such report and reflects eleven transactions totaling $1.83 billion, of which $82 million has been disbursed. Treasury increased the maximum loans to Alaska Airlines to $1.928 billion, JetBlue Airways Corporation to $1.948 billion and SkyWest Airlines to $725 million. New passenger air carrier loans went to Mesa Airlines ($200 million), Eastern Airlines ($15 million) and Southern Airways Express ($1.8 million). Under section 4003(b)(3), Treasury made unsecured loans to businesses critical to maintaining national security: MapLarge ($10 million), Meridian Rapid Defense Group ($7.1 million), Wiser Imagery Services ($3.07 million), oVio Technologies ($1.2 million) and Visual Semantics ($1.05 million).

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“Treasury's Fifth Report Under Section 4026(b)(1) of the CARES Act.” Original at home.treasury.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/u-s-department-of-the-treasury-4026-b-1-b-loan-report-11-04-2020-948f6b43fc/, SHA-256 49cc02a83250283414b3c9a6aa56a76b32a557bdfd5965aace99357f2cacc944.

Full text

Report Under Section 4026(b)(1) of the CARES Act on
Loans to Air Carriers, Eligible Businesses, and National Security Businesses

Program Description

Section 4003 of the Coronavirus Aid, Relief and Economic Security Act (CARES Act)
authorizes the Treasury Department to make loans, loan guarantees, and other
investments to provide liquidity to eligible businesses related to losses incurred as a result
of coronavirus.

The CARES Act provides:

(1) up to $25 billion for loans and loan guarantees for passenger air carriers; eligible
businesses that are certified under 14 CFR part 145 and approved to perform
inspection, repair, replace, or overhaul services; and ticket agents (as defined in
49 U.S.C. § 40102);
(2) up to $4 billion for loans and loan guarantees for cargo air carriers; and
(3) up to $17 billion for loans and loan guarantees for businesses critical to
maintaining national security.

A loan or loan guarantee under section 4003 may be made in such form and on such
terms and conditions and contain such covenants, representations, warranties, and
requirements as the Treasury Secretary determines appropriate. However, the CARES
Act specifies a number of requirements applicable to these loans. Among other
requirements under the statute, borrowers must agree to maintain employment levels as
of March 24, 2020, to the extent practicable, and in any case not reduce their
employment levels by more than 10 percent from the levels on such date, until
September 30, 2020. Borrowers must also agree to certain restrictions on employee
compensation; agree not to repurchase stock, except to the extent required under a
contractual obligation in effect as of March 27, 2020; and agree not to pay dividends or
make other capital distributions with respect to the borrower’s common stock until 12
months after the loan has been repaid.

In addition, the CARES Act requires that Treasury receive a warrant or equity instrument
in the borrower if the borrower is a public company (unless Treasury determines that the
issuance of warrants or equity is infeasible, in which case the company must provide a
senior debt instrument), or a warrant, equity instrument, or senior debt instrument if the
borrower is a private company, to compensate taxpayers.

Reporting Requirements

The CARES Act requires Treasury to make a number of disclosures regarding its loans
and loan guarantees under section 4003 of the CARES Act:

(1) under section 4026(a) of the CARES Act, not later than 72 hours after any
transaction under section 4003(b)(1), (2), or (3) of the CARES Act, Treasury must

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publish on its website a description of the transaction, certain transaction terms,
and transaction documentation;
(2) under section 4026(b)(1)(A) of the CARES Act, not later than seven days after any
loan or loan guarantee under section 4003(b)(1), (2), or (3), Treasury must submit
to Congress a report summarizing the actions taken under those provisions and
certain related financial information;
(3) under section 4026(b)(1)(B) of the CARES Act, not later than seven days after
delivering the report to Congress described above, Treasury must publish the
report on its website; and
(4) under section 4026(b)(1)(C) of the CARES Act, every 30 days while a loan or loan
guarantee under section 4003(b)(1), (2), or (3) is outstanding, Treasury must
publish on its website a report summarizing its reports to Congress described
above.

Current Report

This is Treasury’s fifth report under section 4026(b)(1) of the CARES Act and reflects
eleven transactions: three transactions on October 28, 2020; five transactions on October
30, 2020; two transactions on November 2, 2020; and one transaction on November 3,
2020.

Treasury entered into these eleven loan transactions under section 4003(b)(1), (2), or (3)
of the CARES Act for a total of $1.83 billion, of which $82 million has been disbursed.

Alaska Airlines, Inc.

Treasury agreed to make a loan of up to $1.928 billion to Alaska Airlines, Inc. (Alaska
Airlines). On September 28, 2020, Treasury agreed to make a loan of up to $1.301
billion to Alaska Airlines, and on October 30, 2020, Treasury increased the maximum
loan amount to $1.928 billion. Alaska Airlines is a wholly owned subsidiary of Alaska Air
Group, Inc., and one of the largest domestic airlines in the United States. Alaska
Airlines had approximately 22,000 U.S. employees in March 2020 and carried more
than 46 million passengers in 2019.

Treasury made the loan pursuant to section 4003(b)(1) of the CARES Act. The loan is
secured by Alaska Airline’s Mileage Plan loyalty program, certain aircraft, and engines.
The loan has an interest rate equal to LIBOR plus 2.5% and matures on September 26,
2025. Alaska Airlines elected to draw $135 million at close and may draw the remaining
loan funds in multiple draws through March 26, 2021. The loan proceeds will be used to
provide liquidity to continue Alaska Airline’s operations. The transaction agreement
includes covenants by Alaska Airlines to comply with certain restrictions on employee
compensation, stock repurchases, dividends, and reductions in employment levels, as
required by the CARES Act. Treasury will receive warrants to purchase common stock
equal to 10% of the total loan amount drawn.

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Eastern Airlines, LLC

Treasury agreed to make a loan totaling $15 million to Eastern Airlines, LLC (Eastern
Airlines), a wholly owned subsidiary of Eastern Air Holdings, Inc. Eastern Airlines is a
passenger air carrier with approximately 137 U.S. employees in March 2020.

Treasury made the loan pursuant to section 4003(b)(1) of the CARES Act. The loan is
secured by aircraft, engines, and accounts receivable. The loan has an interest rate
equal to LIBOR plus 3.5% and matures on October 28, 2025. Treasury funded the full
loan amount at close. The loan proceeds will be used to provide liquidity to continue
Eastern Airlines’ operations. The transaction agreement includes covenants by Eastern
Airlines to comply with certain restrictions on employee compensation, stock
repurchases, dividends, and reductions in employment levels, as required by the
CARES Act. The loan constitutes senior indebtedness of Eastern Airlines, and Treasury
will receive 3% payment-in-kind annual interest on the loan in accordance with section
4003(d) of the CARES Act.

JetBlue Airways Corporation

Treasury agreed to make a loan of up to $1.948 billion to JetBlue Airways Corporation
(JetBlue), one of the largest domestic airlines in the United States. On September 29,
2020, Treasury agreed to make a loan of up to $1.14 billion to JetBlue, and on
November 3, 2020, Treasury increased the maximum loan amount to $1.948 billion.
JetBlue had approximately 23,000 U.S. employees in March 2020 and carried more
than 42 million passengers in 2019.

Treasury made the loan pursuant to section 4003(b)(1) of the CARES Act. The loan is
secured by JetBlue’s TrueBlue loyalty program, certain aircraft, and engines. The loan
has an interest rate equal to LIBOR plus 2.75% and matures on September 29, 2025.
JetBlue elected to draw $115 million at close and may draw the remaining loan funds in
multiple draws through March 26, 2021. The loan proceeds will be used to provide
liquidity to continue JetBlue’s operations. The transaction agreement includes
covenants by JetBlue to comply with certain restrictions on employee compensation,
stock repurchases, dividends, and reductions in employment levels, as required by the
CARES Act. Treasury will receive warrants to purchase common stock equal to 10% of
the total loan amount drawn.

MapLarge, Inc.

Treasury agreed to make a loan totaling $10 million to Map Large, Inc. (MapLarge), a
business critical to maintaining national security with approximately 37 U.S. employees
in March 2020.

Treasury made the loan pursuant to section 4003(b)(3) of the CARES Act. The loan is
unsecured. It has an interest rate equal to LIBOR plus 5.5% and matures on October
31, 2025. Treasury funded the full loan amount at close. The loan proceeds will be
used to provide liquidity to continue MapLarge’s operations. The transaction
agreement includes covenants by MapLarge to comply with certain restrictions on

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employee compensation, stock repurchases, dividends, and reductions in employment
levels, as required by the CARES Act. The loan constitutes senior indebtedness of
MapLarge, and Treasury will receive 3% payment-in-kind annual interest on the loan in
accordance with section 4003(d) of the CARES Act.

Meridian Rapid Defense Group, LLC

Treasury agreed to make a loan totaling $7.1 million to Meridian Rapid Defense Group,
LLC (Meridian Rapid Defense), a business critical to maintaining national security with
approximately 14 U.S. employees in March 2020.

Treasury made the loan pursuant to section 4003(b)(3) of the CARES Act. The loan is
unsecured. It has an interest rate equal to LIBOR plus 5.5% and matures on October
30, 2025. Treasury funded the full loan amount at close. The loan proceeds will be
used to provide liquidity to continue Meridian Rapid Defense’s operations. The
transaction agreement includes covenants by to comply with certain restrictions on
employee compensation, stock repurchases, dividends, and reductions in employment
levels, as required by the CARES Act. The loan constitutes senior indebtedness of
Meridian Rapid Defense, and Treasury will receive 3% payment-in-kind annual interest
on the loan in accordance with section 4003(d) of the CARES Act.

Mesa Airlines, Inc.

Treasury agreed to make a loan totaling $200 million to Mesa Airlines, Inc. (Mesa
Airlines), a wholly owned subsidiary of Mesa Air Group, Inc. Mesa Airlines, Inc. had
approximately 3,540 U.S. employees in March 2020.

Treasury made the loan pursuant to section 4003(b)(1) of the CARES Act. The loan is
secured by aircraft, engines, accounts receivable, tooling inventory, simulators and
ground service equipment. The loan has an interest rate equal to LIBOR plus 3.5%
and matures on October 30, 2025. Mesa Airlines elected to draw $43 million at close
and may draw the remaining loan funds in an additional draw before December 15,
2020. The loan proceeds will be used to provide liquidity to continue Mesa Airline’s
operations. The transaction agreement includes covenants by Mesa Airlines to comply
with certain restrictions on employee compensation, stock repurchases, dividends, and
reductions in employment levels, as required by the CARES Act. The loan constitutes
senior indebtedness of Mesa Airlines, and Treasury will receive warrants to purchase
common stock equal to 10% of the total loan amount drawn.

oVio Technologies, Inc.

Treasury agreed to make a loan totaling $1.2 million to oVio Technologies, Inc. (oVio
Technologies), a business critical to maintaining national security with approximately
six U.S. employees in March 2020.

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used to provide liquidity to continue oVio Technologies’ operations. The transaction
agreement includes covenants by oVio Technologies to comply with certain restrictions
on employee compensation, stock repurchases, dividends, and reductions in
employment levels, as required by the CARES Act. The loan constitutes senior
indebtedness of oVio Technologies, and Treasury will receive 3% payment-in-kind
annual interest on the loan in accordance with section 4003(d) of the CARES Act.

SkyWest Airlines, Inc.

Treasury agreed to make a loan of up to $725 million to SkyWest Airlines, Inc.
(SkyWest Airlines). On September 29, 2020, Treasury agreed to make a loan of up to
$573 million to SkyWest, and on October 28, 2020, Treasury increased the maximum
loan amount to $725 million. SkyWest Airlines is a wholly owned subsidiary of
SkyWest, Inc., and one of the largest domestic airlines in the United States. SkyWest
Airlines had approximately 15,000 U.S. employees in March 2020 and carried more
than 35 million passengers in 2019.

Treasury made the loan pursuant to section 4003(b)(1) of the CARES Act. The loan is
secured by certain engines, airframes, and rotable parts. The loan has an interest rate
equal to LIBOR plus 3.0% and matures on September 29, 2025. SkyWest Airlines
elected to draw $60 million at close and may draw the remaining loan funds in multiple
draws through March 26, 2021. The loan proceeds will be used to provide liquidity to
continue SkyWest Airlines’ operations. The transaction agreement includes covenants
by SkyWest Airlines to comply with certain restrictions on employee compensation,
stock repurchases, dividends, and reductions in employment levels, as required by the
CARES Act. Treasury will receive warrants to purchase common stock equal to 10% of
the total loan amount drawn.

Southern Airways Express, LLC

Treasury agreed to make a loan totaling $1.8 million to Southern Airways Express, LLC
(Southern Airways Express), a wholly owned subsidiary of Southern Airways Corp. The
Company is a passenger air carrier with approximately 458 U.S. employees in March
2020.

Treasury made the loan pursuant to section 4003(b)(1) of the CARES Act. The loan is
secured by aircraft, flight simulators, engines, and spare parts. The loan has an interest
rate equal to LIBOR plus 3.5% and matures on October 28, 2025. Treasury funded the
full loan amount at close. The loan proceeds will be used to provide liquidity to continue
Southern Airways Express operations. The transaction agreement includes covenants
by Southern Airways Express to comply with certain restrictions on employee
compensation, stock repurchases, dividends, and reductions in employment levels, as
required by the CARES Act. The loan constitutes senior indebtedness of Southern
Airways Express, and Treasury will also receive 3% payment-in-kind annual interest on
the loan in accordance with section 4003(d) of the CARES Act.

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Visual Semantics, Inc.

Treasury agreed to make a loan totaling $1.05 million to Visual Semantics, Inc. (Visual
Semantics), a business critical to maintaining national security with approximately nine
U.S. employees in March 2020.

Treasury made the loan pursuant to section 4003(b)(3) of the CARES Act. The loan is
unsecured. It has an interest rate equal to LIBOR plus 5.5% and matures on October
30, 2025. Treasury funded the full loan amount at close. The loan proceeds will be
used to provide liquidity to continue Visual Semantics’ operations. The transaction
agreement includes covenants by Visual Semantics to comply with certain restrictions
on employee compensation, stock repurchases, dividends, and reductions in
employment levels, as required by the CARES Act. The loan constitutes senior
indebtedness of Visual Semantics, and Treasury will receive 3% payment-in-kind
annual interest on the loan in accordance with section 4003(d) of the CARES Act.

Wiser Imagery Services, LLC

Treasury agreed to make a loan totaling $3.07 million to Wiser Imagery Services, LLC
(Wiser Imagery Services), a business critical to maintaining national security with
approximately 135 U.S. employees in March 2020.

Treasury made the loan pursuant to section 4003(b)(3) of the CARES Act. The loan is
unsecured. It has an interest rate equal to LIBOR plus 5.5% and matures on October
30, 2025. Treasury funded the full loan amount at close. The loan proceeds will be
used to provide liquidity to continue Wiser Imagery Services’ operations. The
transaction agreement includes covenants by Wiser Imagery Services to comply with
certain restrictions on employee compensation, stock repurchases, dividends, and
reductions in employment levels, as required by the CARES Act. The loan constitutes
senior indebtedness of Wiser Imagery Services, and Treasury will receive 3%
payment-in-kind annual interest on the loan in accordance with section 4003(d) of the
CARES Act.

The loan agreements are available on Treasury’s website at
https://home.treasury.gov/policy-issues/cares/preserving-jobs-for-american-
industry/loans-to-air-carriers-eligible-businesses-and-national-security-businesses.

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Detailed Financial Statement

Total
Borrower Date of Loan Anticipated
Borrower Type1 City2 State2 Agreement Maturity Date Loan Amount Disbursements3

9/28/2020
Alaska Passenger
Seattle WA (amended Oct. 9/26/2025 $1,928,000,000 $135,000,000
Airlines, Inc.4 Air Carrier
30, 2020)

Eastern Passenger
Wayne PA 10/28/2020 10/28/2025 $15,000,000 $15,000,000
Airlines LLC Air Carrier

JetBlue 9/29/2020
Passenger Long Island
Airways NY (amended 9/29/2025 $1,948,000,000 $115,000,000
Air Carrier City
Corporation5 11/3/2020)

MapLarge, National
Atlanta GA 11/2/2020 10/31/2025 $10,000,000 $10,000,000
Inc. Security
Meridian
Rapid National
Pasadena CA 10/30/2020 10/30/2025 $7,100,000 $7,100,000
Defense Security
Group, Inc.

Mesa Passenger
Phoenix AZ 10/30/2020 10/30/2025 $200,000,000 $43,000,000
Airlines, Inc. Air Carrier

oVio
National Newport
Technologies, CA 11/2/2020 10/31/2025 $1,186,900 $1,186,900
Security Beach
Inc.
9/29/2020
SkyWest Passenger
St. George UT (amended 9/29/2025 $725,000,000 $60,000,000
Airlines6 Air Carrier
10/28/2020)
Southern
Passenger Pompano
Airways FL 10/28/2020 10/28/2025 $1,838,501 $1,838,501
Air Carrier Beach
Express
Visual
National
Semantics, Austin TX 10/30/2020 10/30/2025 $1,053,200 $1,053,200
Security
Inc.
Wiser
National
Imagery Murfreesboro TN 10/30/2020 10/30/2025 $3,069,700 $3,069,700
Security
Services, LLC

1. Only certain categories of entities are eligible to receive loans under sections 4003(b)(1), (2), and (3) of the CARES Act. Under those
provisions, a borrower must be a passenger air carrier; a business that is certified under 14 CFR part 145 and approved to perform
inspection, repair, replace, or overhaul services; a ticket agent (as defined in 49 U.S.C. 40102); a cargo air carrier; or a business
critical to maintaining national security.
2. The location provided is the address included by borrowers in their applications and may not include all locations in which a borrower
operates.
3. Includes disbursements to Eastern Airlines LLC, Map Large, Inc., Meridian Rapid Defense Group, Inc., Mesa Airlines, Inc., oVio
Technologies, Inc., Southern Airways Express LLC, Visual Semantics, Inc., and Wiser Imagery Services, LLC between October 28
and November 2; to Alaska Airlines, Inc. on September 28, 2020; to JetBlue Airways Corporation on September 29, 2020; and to
SkyWest Airlines, Inc. on September 29, 2020.
4. Alaska Airlines, Inc. entered into a loan agreement for up to $1.301 billion on September 28, 2020, and an amendment on October
30, 2020, increasing the maximum loan amount by $627 million.
5. JetBlue Airways Corporation entered into a loan agreement for up to $1.14 billion on September 29, 2020, and an amendment on
November 3, 2020, increasing the maximum loan amount by $808 million.
6. SkyWest Airlines, Inc. entered into a loan agreement for up to $573 million on September 29, 2020, and an amendment on October
28, 2020 increasing the maximum loan amount by $152 million.

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