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

Summary

The U.S. Department of the Treasury's eleventh report under Section 4026(b)(1) of the CARES Act on loans to air carriers, eligible businesses and national security businesses. It reflects one disbursement made on December 22, 2020, related to a transaction under section 4003(b)(3) whose loan closed before this reporting period; the total disbursed in the period was $30,000,000. The financial statement lists YRC Worldwide, Inc. of Overland Park as a national security borrower with a loan agreement dated 7/7/2020, a maturity date of 9/30/2024, a loan amount of $700,000,000 and total disbursements of $374,800,000. The report restates CARES Act conditions on employment levels, stock repurchases, dividends and warrants.

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“Treasury's Eleventh 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-12-29-2020-a6f0a33e1b/, SHA-256 decbf77410fd9b9010174cea7b378f45524ed05332b575346e1cf0818ef8bc34.

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;
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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 eleventh report under section 4026(b)(1) of the CARES Act and reflects
one disbursement made on December 22, 2020, related to a transaction with an entity
whose loan closed before this reporting period. Treasury entered into this transaction
under section 4003(b)(3) of the CARES Act. The total amount disbursed during this
reporting period was $30,000,000.

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


      YRC                National         Overland Park             KS              7/7/2020          9/30/2024         $700,000,000         $374,800,000
 Worldwide, Inc.         Security


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 $30 million to YRC Worldwide, Inc. on December 22, 2020.




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