American Airways Group Inc. (NASDAQ: AAL), has obtained a abstract time period sheet from the U.S. Division of the Treasury for the grant program (the “Payroll Help Program”) and the secured mortgage program, every in reference to implementation of the CARES Act.
AAL has indicated to Treasury that it has accepted the phrases of the grant and intends to use for a secured mortgage.
Treasury is to offer to the Firm a grant in an quantity anticipated to be roughly $5,810 million. In consideration for the grant, AAL would situation to Treasury a low-interest price, PSP mortgage within the principal quantity of roughly $1,713 million, which obligation will mature 10 years after issuance. The PSP Time period mortgage will probably be prepayable at any time at par. Additionally in consideration for the grant, the Firm would situation to PSP warrants to buy roughly 13.7 million shares of widespread inventory of the Firm at a worth of $12.51 per share (primarily based on the closing worth of the Firm’s widespread inventory on The Nasdaq World Choose Market on April 9, 2020). The PSP Warrants will expire 5 years after issuance, and will probably be exercisable both by internet share settlement or money, on the Firm’s possibility.
In reference to the Payroll Help Program, AAL will probably be required to adjust to the related provisions of the CARES Act, together with the requirement that the grant will completely be used for the continuation of fee of worker wages, salaries and advantages, and the provisions prohibiting the repurchase of widespread inventory and the fee of widespread inventory dividends till September 30, 2021, in addition to these limiting the fee of sure govt compensation till March 24, 2022.
Will the airways take this cash after which layoff their workers down the highway?