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Draft invoice places 1-year ban on buybacks for bailed out companies – EAST AUTO NEWS

Draft invoice places 1-year ban on buybacks for bailed out companies


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A draft copy of the huge $2 trillion Senate coronavirus rescue bundle anticipated to be handed on Wednesday would bar corporations receiving federal loans from inventory buybacks for one yr after the mortgage is paid again.

The invoice authorizes $25 billion in loans to passenger air carriers, $four billion to cargo air carriers, and $17 billion for “companies essential to sustaining nationwide safety.” It additionally authorizes as much as $454 billion in loans to different eligible companies in any other case unable to obtain credit score. 

The laws would additionally bar massive corporations from paying dividends to shareholders for one yr after the mortgage is paid again, and from decreasing their employment ranges by 10% till the tip of September. Midsized corporations can be barred from paying dividends whereas the mortgage is excellent. 

Along with loans, the laws additionally authorizes money grants to these within the airline trade. It requires $25 billion in grants for passenger airways, $four billion for cargo carriers and $three billion for contractors. 

The grant situations name for a pause on dividends and buybacks by means of September 2021 and a pledge to “chorus from conducting involuntary furloughs or decreasing pay charges and advantages till September 30, 2020.”

Liberals and a few high-profile conservatives expressed assist for situations on taxpayer help to corporations hit by COVID-19. President Donald Trump, throughout a White Home information briefing final week, stated he supported such a provision. Sen. Elizabeth Warren, a former Democratic presidential candidate, contended that bailed-out companies must be barred from conducting buybacks completely. 

The textual content of the laws must be finalized and voted on by the Senate, accredited by the Democratic-controlled Home of Representatives and signed by Trump earlier than turning into regulation.

The Senate is predicted to take up the laws later Wednesday. The Home is unlikely to vote on the matter till Thursday.

— CNBC’s Kayla Tausche contributed to this report.

Draft invoice places 1-year ban on buybacks for bailed out companies – EAST AUTO NEWS
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