Treasury Report Under Section 4026(b)(1)(C) of the CARES Act (August 7, 2020)

Summary

Treasury's first summary report under Section 4026(b)(1)(C) of the CARES Act, dated August 7, 2020, covering loans to air carriers, eligible businesses and national security businesses. It states that the CARES Act provides up to $25 billion for passenger air carriers, repair businesses and ticket agents, up to $4 billion for cargo air carriers and up to $17 billion for businesses critical to maintaining national security. The report reflects one transaction, which occurred on July 8, 2020: a loan to YRC Worldwide Inc., a national security borrower. Its financial statement, in thousands of dollars, lists a $700,000 loan amount, $245,000 in total anticipated disbursements and $245,572 outstanding.

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

                                      August 7, 2020

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:




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     (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;
     (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.

Treasury has published the information and reports described above on its website at
https://home.treasury.gov/policy-issues/cares/preserving-jobs-for-american-
industry/loans-to-air-carriers-eligible-businesses-and-national-security-businesses.

Current Report

This is Treasury’s first summary report under section 4026(b)(1)(C) of the CARES Act
and summarizes information about transactions under sections 4003(b)(1), (2), and (3) of
the CARES Act.

This report reflects one transaction, which occurred on July 8, 2020.

Detailed Financial Statement ($ in Thousands)
                                                                                      Total                                Total
                                                       Date of                     Anticipated                          Outstanding
                Borrower                                Loan           Maturity       Loan                                 Loan
  Borrower        Type1         City2       State2    Agreement         Date        Amount          Disbursements3       Amount4
    YRC
                 National     Overland
 Worldwide                                    KS       7/8/2020        9/30/24      $700,000            $245,000          $245,572
                 Security        Park
     Inc.
Note: Data are as of the date of this report.

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. “Disbursements” includes all loan disbursements.
4. “Total Outstanding Loan Amount” includes all loan disbursements and increases of loan principal amount arising from payment-
   in-kind (PIK) interest.




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