Treasury's Tenth 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 tenth such report and reflects one amendment agreed to on December 8, 2020 and one disbursement made on December 10, 2020, both under section 4003(b)(1). The total disbursed during the reporting period was $58,000,000, paid to Republic Airways, Inc. The report states that the Republic loan agreement provides for up to $77 million, but no additional disbursements are anticipated. United Airlines, Inc. entered into a second amendment on December 8, 2020 decreasing the maximum loan amount by $9 million, after a November 6, 2020 amendment that had increased it by $2.33 billion.
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“Treasury's Tenth 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-12-15-2020-350a51bac8/
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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;
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(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 tenth report under section 4026(b)(1) of the CARES Act and reflects
one amendment agreed to on December 8, 2020 and one disbursement made on
December 10, 2020. The amendment and the disbursement relate to transactions with
entities whose loans closed before this reporting period. Treasury entered into these
transactions under section 4003(b)(1) of the CARES Act. The total amount disbursed
during this reporting period was $58,000,000.
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 Maturity Anticipated
Borrower Type1 City2 State2 Agreement Date Loan Amount Disbursements3
Republic
Passenger Air Indianapolis IN 11/6/2020 11/6/2025 $58,000,000 $58,000,000
Airways, Inc.
Carrier
9/28/2020
(as amended
United Airlines, Passenger Air
Chicago IL on 11/6/2020 9/26/2025 $7,491,000,0004 $520,000,000
Inc. Carrier
and on
12/8/2020)
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 a disbursement of $58 million to Republic Airways, Inc. on December 10, 2020, and of $520 million to United Airlines, Inc. on
September 28, 2020. The loan agreement for Republic Airlines, Inc. provides for a total loan amount of up to $77 million, but no additional
disbursements to Republic Airways, Inc. are anticipated.
4. United Airlines, Inc. entered into a loan agreement for up to $5.17 billion on September 28, 2020; an amendment on November 6, 2020,
increasing the maximum loan amount by $2.33 billion; and a second amendment on December 8, 2020, decreasing the maximum loan
amount by $9 million.
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