SkyWest has entered into a $573 million five-year loan and guarantee agreement with the US Treasury Department under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). On September 29, SkyWest Airlines borrowed $60 million under the facility and has until March 26, 2021 to determine if it will borrow additional amounts in up to two subsequent borrowings.
The interest rate under the secured term loan facility is LIBOR plus 3.0% with no amortization. In consideration for the loan, SkyWest is obligated to issue warrants to the Treasury to purchase shares of common stock based on amounts drawn under the secured term loan facility. In connection with the initial $60 million draw under the facility, SkyWest issued warrants to purchase 211,416 shares of common stock at an exercise price of $28.38 per share.
The loan and guarantee agreement includes certain restrictions on the payment of dividends and the repurchase of SkyWest shares. The secured loan is collateralised by aircraft engines and aircraft parts.