Treasury's Sixth 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 sixth such report and reflects eleven transactions, with a total commitment of $2,450,624,953, of which $6 million has been disbursed. Treasury increased the maximum loan to United Airlines, Inc. from $5.17 billion to $7.5 billion on November 6, 2020, secured by routes, aircraft and flight simulators. Other loans include $77,000,000 to Republic, a passenger air carrier, $15,000,000 to Caribbean Sun Airlines, $8,390,240 to Timco Engine Center and $6,000,000 to Core Avionics & Industrial, a business critical to maintaining national security. Smaller loans went to repair stations and carriers including Allflight, Aviation Management & Repairs, Elite Airways, Thomas Global Systems, American Jet International and Island Wings.

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“Treasury's Sixth 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-11-12-2020-a8995b475d/, SHA-256 30f83b737aac8d81a066c110e88730bc7c0448a677c441e173e98c8d1b8ea36b.

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
publish on its website a description of the transaction, certain transaction terms,
and transaction documentation;
1
(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 sixth report under section 4026(b)(1) of the CARES Act and reflects
eleven transactions: seven transactions on November 5, 2020; two transactions on
November 6, 2020; and two transactions on November 9, 2020.

Treasury made these eleven loans pursuant to section 4003(b)(1), (2), and(3) of the
CARES Act. Treasury’s total commitment under these eleven transactions is
$2,450,624,953, of which $6 million has been disbursed.

Allflight Corporation

Treasury agreed to make a loan totaling $4,721,260 to Allflight Corp. (Allflight), a
wholly owned subsidiary of 8 Alpha, Inc. Allflight is a repair station with approximately
35 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 tooling, inventory, engines, and spare parts. The loan has an interest rate
equal to LIBOR plus 3.5% and matures on November 5, 2025. Allflight may draw the
loan proceeds in a single draw through November 19, 2020. The loan proceeds will be
used to provide liquidity to continue Allflight’s operations. The transaction agreement
includes covenants by Allflight 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 Allflight, and
Treasury will receive 3% payment-in-kind annual interest on the loan in accordance
with section 4003(d) of the CARES Act.

2
American Jet International Corporation

Treasury agreed to make a loan totaling $1,162,124 to American Jet International
Corp. (American Jet), an air carrier with approximately 44 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 accounts receivable. It has an annual interest rate equal to LIBOR plus
3.5% and matures on November 5, 2025. American Jet may draw the loan proceeds
in a single draw through November 19, 2020. The loan proceeds will be used to
provide liquidity to continue American Jet’s operations. The transaction agreement
includes covenants by American Jet 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 American
Jet, and Treasury will receive 3% payment-in-kind annual interest on the loan in
accordance with section 4003(d) of the CARES Act.

Aviation Management & Repairs, Inc.

Treasury agreed to make a loan totaling $4,026,705 to Aviation Management &
Repairs, Inc. (Aviation Management & Repairs), a repair station with approximately 6
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, accounts receivable, ground support equipment, and engines and
spare parts. It has an annual interest rate equal to LIBOR plus 3.5% and matures on
November 5, 2025. Aviation Management & Repairs may draw the loan proceeds in a
single draw through November 19, 2020. The loan proceeds will be used to provide
liquidity to continue American Management & Repairs’ operations. The transaction
agreement includes covenants by American Management & Repairs 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 American Management & Repairs, and Treasury will receive
3% payment-in-kind annual interest on the loan in accordance with section 4003(d) of
the CARES Act.

Caribbean Sun Airlines, Inc.

Treasury agreed to make a loan totaling $15,000,000 to Caribbean Sun Airlines, Inc.
(Caribbean Sun), a passenger air carrier with approximately 173 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 rotable spare parts. The loan has an interest rate
equal to LIBOR plus 3.5% and matures on November 5, 2025. Caribbean Sun may
draw the loan proceeds in a single draw through November 19, 2020. The loan
proceeds will be used to provide liquidity to continue Caribbean Sun’s operations. The
transaction agreement includes covenants by Caribbean Sun to comply with certain
restrictions on employee compensation, stock repurchases, dividends, and reductions
3
in employment levels, as required by the CARES Act. The loan constitutes senior
indebtedness of Caribbean Sun, and Treasury will receive 3% payment-in-kind annual
interest on the loan in accordance with section 4003(d) of the CARES Act.

Core Avionics & Industrial, Inc.

Treasury agreed to make a loan totaling $6,000,000 to Core Avionics & Industrial, Inc.
(Core Avionics), a business critical to maintaining national security with approximately
25 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 annual interest rate equal to LIBOR plus 5.5% and matures on
November 5, 2025. Treasury funded the full loan amount at close. The loan proceeds
will be used to provide liquidity to continue Core Avionics’ operations. The transaction
agreement includes covenants by Core Avionics 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
Core Avionics, and Treasury will receive 3% payment-in-kind annual interest on the loan
in accordance with section 4003(d) of the CARES Act.

Elite Airways, LLC

Treasury agreed to make a loan totaling $2,630,274 to Elite Airways, LLC (Elite
Airways), a passenger air carrier with approximately 110 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 ground support equipment and spare parts. It has an annual interest rate
equal to LIBOR plus 3.5% and matures on November 7, 2025. Elite Airways may draw
the loan proceeds in a single draw through November 23, 2020. The loan proceeds
will be used to provide liquidity to continue Elite Airways’ operations. The transaction
agreement includes covenants by Elite Airways 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
Elite Airways, and Treasury will receive 3% payment-in-kind annual interest on the
loan in accordance with section 4003(d) of the CARES Act.

Island Wings, Inc.

Treasury agreed to make a loan totaling $294,350 to Island Wings, Inc. (Island Wings),
an air cargo carrier with approximately 0 U.S. employees in March 2020. 1

Treasury made the loan pursuant to section 4003(b)(1) of the CARES Act. The loan is
secured by aircraft. The loan has an interest rate equal to LIBOR plus 3.5% and
matures on November 5, 2025. Island Wings may draw the loan proceeds in a single
draw through November 19, 2020. The loan proceeds will be used to provide liquidity

1
Island Wings, Inc. had 0 employees in March 2020, but it rehired its employees in April and over the
course of summer 2020.
4
to continue Island Wings’ operations. The transaction agreement includes covenants
by Island Wings 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 Island Wings, and Treasury
will receive 3% payment-in-kind annual interest on the loan in accordance with section
4003(d) of the CARES Act.

Republic Airlines, Inc.

Treasury agreed to make a loan totaling $77,000,000 to Republic Airways, Inc.
(Republic), a passenger air carrier with approximately 6,700 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 spare parts and tooling inventory. This loan has an interest rate equal to
LIBOR plus 3.5% and matures on November 6, 2025. Republic may draw the loan
proceeds in up to two draws through December 15, 2020. The loan proceeds will be
used to provide liquidity to continue Republic’s operations. The transaction agreement
includes covenants by Republic 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.

Thomas Global Systems LLC

Treasury agreed to make a loan totaling $1,400,000 to Thomas Global Systems LLC
(Thomas Global), a wholly owned subsidiary of Thomas Global Systems Inc. The
Company is a repair station with approximately 20 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 accounts receivable. It has an interest rate equal to LIBOR plus 3.5% and
matures on November 7, 2025. Thomas Global may draw the loan proceeds in a
single draw through November 23, 2020. The loan proceeds will be used to provide
liquidity to continue Thomas Global’s operations. The transaction agreement includes
covenants by Thomas Global 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 Thomas
Global, and Treasury will receive 3% payment-in-kind annual interest on the loan in
accordance with section 4003(d) of the CARES Act.

Timco Engine Center, Inc.

Treasury agreed to make a loan totaling $8,390,240 to Timco Engine Center, Inc.
(Timco), a wholly owned subsidiary of Oscoda Engine Services Corp. Timco is a
repair station with approximately 25 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 engines and spare parts, accounts receivable, ground support equipment,
tooling, and inventory. The loan has an interest rate equal to LIBOR plus 3.5% and
5
matures on November 5, 2025. Timco may draw the loan proceeds in a single draw
through November 19, 2020. The loan proceeds will be used to provide liquidity to
continue Timco’s operations. The transaction agreement includes covenants by Timco
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 Timco, and Treasury will receive 3% payment-
in-kind annual interest on the loan in accordance with section 4003(d) of the CARES
Act.

United Airlines, Inc.

Treasury agreed to make a loan of up to $7,500,000,000 to United Airlines, Inc.
(United), a wholly owned subsidiary of United Airlines Holdings, Inc., and one of the
largest domestic airlines in the United States. On September 28, 2020, Treasury
agreed to make a loan of up to $5.17 billion to United, and on November 6, 2020,
Treasury increased the maximum loan amount to $7.5 billion. United had approximately
93,000 U.S. employees in March 2020 and carried more than 162 million passengers in
2019.

Treasury made the loan pursuant to section 4003(b)(1) of the CARES Act. The loan is
secured by United’s European, South American, Pacific, Oceanic, and Asian routes,
certain aircraft, and flight simulators. The loan has an interest rate equal to LIBOR plus
3.0% and matures on September 26, 2025. United elected to draw $520 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 United’s operations. The
transaction agreement includes covenants by United 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.

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

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

Repair
Allflight
Station Kent WA 11/5/2020 11/5/2025 $4,721,260 $0
Corporation
Operator

American Jet
International Passenger
Houston TX 11/5/2020 11/5/2025 $1,162,124 $0
Corporation Air Carrier

Aviation
Management Repair
& Repairs, Station Fort Pierce FL 11/5/2020 11/5/2025 $4,026,705 $0
Inc. Operator

Caribbean
Sun Airlines, Passenger Virginia
FL 11/5/2020 11/5/2025 $15,000,000 $0
Inc. Air Carrier Garden

Core
Avionics & National
Tampa FL 11/5/2020 11/5/2025 $6,000,000 $6,000,000
Industrial Inc. Security

Elite Passenger
Airways, LLC Portland ME 11/9/2020 11/7/2025 $2,630,274 $0
Air Carrier

Island Cargo Air Fort
Wings, Inc. FL 11/5/2020 11/5/2025 $294,350 $0
Carrier Lauderdale

Republic Passenger
Airways, Inc. Indianapolis IN 11/6/2020 11/6/2025 $77,000,000 $0
Air Carrier

Thomas
Global Repair
Systems, Station Irvine CA 11/9/2020 11/7/2025 $1,400,000 $0
LLC Operator

Timco Repair
Engine Station Oscoda MI 11/5/2020 11/5/2025 $8,390,240 $0
Center, Inc. Operator

9/28/2020
United Passenger
Chicago IL (amended 9/26/2025 $7,500,000,000 $520,000,000
Airlines, Inc.4 Air Carrier
11/6/2020)

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 Core Avionics & Industrial, Inc. on November 5, 2020, and to United Airlines, Inc. on September 28, 2020.
4. United Airlines, Inc. entered into a loan agreement for up to $5.17 billion on September 28, 2020, and an amendment on November
6, 2020, increasing the maximum loan amount by $2.33 billion.

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