JetBlue Airways Corporation has completed negotiations with the US treasury over the carrier’s $936 million CARES aid package.
As a result on April 23 the US Treasury disbursed the full amount to JetBlue as part of a Payroll Support Payment (PSP)programme of the CARES ACT.
The $936million includes a grant of $685.1 million and a loan of $250.7 million, the latter secured against a promissory note issued by JetBlue to the US Treasury.
As with other firms, JetBlue has had to agree to accept a number of conditions for support such as the contusion on service and limits on executive pay and stock buybacks.
As part of the PSP JetBlue issued warrants to the Treasury warrants to purchase 2,639,226 shares of common stock at an exercise price of $9.50 per share, expiring in five years’ time and are exercisable either through net cash settlement or net share settlement, at JetBlue’s option.
The Warrants do not have any voting rights and are freely transferrable by the US Treasury.
The romissory note is for $250.7 million and it will mature in 10. The principal amount is payable in a lump sum at maturity and is prepayable at any time at par. The promissory note bears interest on the principal amount outstanding from time to time at an annual rate of 1.00% until April 23, 2025, and the Applicable SOFR Rate plus 2.00% thereafter until April 23, 2030.
Interest is payable in arrears on the last business day of March and September of each year, beginning on September 30, 2020. Any JetBlue subsidiary that guarantees certain other material unsecured indebtedness of JetBlue or its subsidiaries must guarantee JetBlue’s obligations under the promissory note.
The same 8-K filing which outlined the CARES package also said that JetBlue has drawn down on a previously announced $550 million revolving credit facility. On April 22, JetBlue drew down the full amount of a revolver facility that had been in place since 2017 and amended in August last year.
Citibank is the administrative agent on the revolving credit facility.