Yellow protects the transparency of the CARES Act

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Yellow Corp. [NASDAQ: YELL] CEO Darren Hawkins is confident he can show lawmakers that the $ 700 million CARES loan under a new Congressional investigation is in full compliance with the loan.

“With regard to your question regarding our ‘right to receive and use funds’, please rest assured that the Subcommittee’s request and Yellow Corporation documents will conclusively confirm that the information provided by the Company when applying for a loan was completely accurate and the use of the loan funds were and remain fully eligible, transparent and in full compliance with loan agreements, ”Hawkins said in a letter excerpted from FreightWaves sent Thursday to the Coronavirus Subcommittee.

Subcommittee launched an investigation on June 3

The main source of controversy over the loan, which was being investigated shortly after it was approved last year, was questions about whether Yellow’s contract with the U.S. Department of Defense (DOD) to supply less trucks was controlled. being critical to maintaining national security.

Yellow said the Department of Defense’s confirmation that Yellow provides 68% of LTL services to the department is accurate and that the 20% to 40% lower estimates provided by Crowley Logistics, which subcontracts Yellow, were in error. Crowley also suggested – inaccurately, according to Yellow – that the US Department of Defense’s capacity “could be easily replaced by other shipping companies.”

Hawkins said Crowley’s estimates were based on the “incomplete picture” Crowley had about the cargo service Yellow provides to the Department of Defense and other government agencies, which is likely based on the amount of Department of Defense business that Yellow does through Crowley.

For example, he stated that from March 2020 to February 2021, 25.2% of US Department of Defense supplies (48,653 out of 193,322) were received through Crowley, with the remainder received directly from the US Department of Defense. “In other words, our contract with Crowley is only one out of every four shipments we have been bringing in for the Department of Defense.”

Hawkins also stressed, according to excerpts from his letter, that the CARES loan helped provide his company with the necessary liquidity to:

  • Stay a critical link in numerous supply chains across the United States and handle millions of cargo shipments, including hundreds of thousands for the Department of Defense.
  • Let our roughly 30,000 employees, including 24,000 union members (mostly drivers), work day and night in loading yards, shipping yards and on America’s highways to ensure the uninterrupted delivery of urgently needed military supplies, personal protective equipment, items household items, medicines, food and other essentials.
  • Let us continue to meet our commitment to fund the cost of health insurance for our retirees and employees, many of whom were frontline workers exposed to COVID-19 exposure on a daily basis.
  • Let us fight global warming by upgrading our fleet with safer, more fuel efficient trucks and trailers, reform our business and return to profitable operations.

The committee asked Yellow to prepare a list of eight types of loan-related documents by June 17th. “The company’s legal counsel will contact the Subcommittee to meet and discuss the scope of their requests for documents and agree on a mutually acceptable schedule. to produce our documentation, ”Hawkins said.

Click here to see more articles by John Gallagher on FreightWaves.



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