Mesa Air Group closes $ 200 million secured loan

PHOENIX, Nov. 02, 2020 (GLOBE NEWSWIRE) – Mesa Air Group, Inc. (NASDAQ: MESA) today announced that it has entered into a five-year loan and guarantee agreement on October 30, 2020 with the US Department of the Treasury which provides to Mesa Airlines a secured term loan facility to borrow up to $ 200 million under the Coronavirus Help, Relief and Economic Security Act (CARES Act).

On October 30, 2020, Mesa borrowed $ 43 million under the facility and has until December 15, 2020 to determine whether it will borrow up to an additional $ 157 million in a subsequent borrowing. Mesa’s ability to borrow up to an additional $ 157 million is conditional upon the satisfaction of certain conditions precedent under the secured term loan facility, including, among other things, updated valuations, compliance with the ratio. warranty coverage and the release of warranty liens. which will guarantee such additional indebtedness.

“I want to thank Treasury Secretary Steven Mnuchin and Assistant Secretary Mitchell Silk for their willingness to work with Mesa to find a way forward,” said Jonathan Ornstein, President and CEO. “We are also very grateful for the strong support from the Arizona Congressional delegation, especially Arizona Senators Martha McSally, Kyrsten Sinema and Congresswoman Debbie Lesko (AZ-08). With the help of the entire Arizona congressional delegation, Mesa Airlines was able to maximize our loan from the US Treasury, ”Ornstein said. “Senator McSally has been extremely effective in her discussions with the administration on our behalf, and Senator Sinema has been successful in including language in the HEROES Act to provide additional economic support to Mesa and our employees.” MP Lesko led a letter of support to Treasury Secretary Mnuchin along with other members of the House delegation – Representatives Andy Biggs (R-AZ-05), Ruben Gallego (D-AZ-07), Paul Gosar ( R-AZ-04)), Raul Grijalva (D-AZ-03), Ann Kirkpatrick (D-AZ-02), Tom O’Halleran (D-AZ-01), David Schweikert (R-AZ-06) and Greg Stanton (D- AZ-09).

“This $ 200 million will strengthen Mesa as we navigate this volatile time of COVID-19 and allow us to continue our long history as the largest Arizona-based airline,” added Mike Lotz, president and chief financial officer of Mesa. Airlines.

The interest rate on all borrowings is the adjusted LIBO rate (as defined in the term loan facility) plus 3.50% for a term of five years with no amortization or prepayment penalty. In consideration for the loan, Mesa is obligated to issue warrants to the US Department of the Treasury to purchase common shares of Mesa based on and in connection with the amounts drawn under the facility. As part of the initial drawdown of $ 43 million under the facility, Mesa issued warrants to purchase 1,080,402 common shares at an exercise price of $ 3.98 per share. Upon subsequent borrowing under the facility, Mesa will issue additional warrants to the Treasury to purchase Common Shares determined by multiplying the principal amount of the subsequent loan by 10% and dividing the result by 3.98 $.

The loan agreement contains two financial covenants, a minimum collateral coverage ratio and a minimum level of liquidity. The loan agreement also prohibits Mesa from paying dividends, making share buybacks and imposes certain limits on executive compensation. The loan is secured by certain aircraft, aircraft engines, accounts receivable, ground service equipment and tools.

About Mesa Air Group, Inc.

Based in Phoenix, Arizona, Mesa Air Group, Inc. is the holding company of Mesa Airlines, a regional airline providing scheduled passenger service to 103 cities in 35 states, the District of Columbia and Mexico. As of September 30, 2020, Mesa operated a fleet of 145 aircraft with approximately 373 daily departures and 3,400 employees. Mesa operates all of its flights as American Eagle, United Express, or DHL Express under the terms of capacity purchase agreements with American Airlines, Inc., United Airlines, Inc. and DHL.

Forward-looking statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the amount available for Mesa to borrow under the loan facility. term secured with the US Treasury in connection with the subsequent borrowing and the expected timing of such borrowing. All forward-looking statements contained in this press release are made as of the date hereof and are based on information available to Mesa as of that date. These forward-looking statements represent the judgment of the company, as of the date of this release, and the company disclaims any intention or obligation to update or publicly review any forward-looking statement, whether as a result of new information, developments future or otherwise, except to the extent required by applicable securities laws.

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Jonathan ornstein
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