CAT US, a subsidiary of Continental Airlines Technology Holdings (00232), signed a settlement agreement with the US Department of Justice

Zhitong Finance App News, Continental Aerospace Technology Holdings (00232) issued an announcement. Continental Aerospace Technologies, Inc. (CAT US), an indirect wholly-owned subsidiary of the Company, and the US Department of Justice (DOJ) entered into a settlement agreement (settlement agreement) on July 31, 2026 (US Central Daylight Time) regarding salary protection plans obtained by CAT US and subsequently exempted under the US Coronavirus Assistance, Relief and Economic Security Act (CARES Act) (CARES Act) ( PPP) loans. This settlement must be kept confidential. On August 3, 2026 (US Central Daylight Time), the Department of Justice notified CAT US that it had no objection to the Company's disclosure of the settlement. CAT US immediately notified the Company to disclose the settlement after receiving confirmation from the Ministry of Justice that there was no objection.

During the COVID-19 pandemic in 2020, CAT US, like many manufacturers, faced severe operational disruptions, supply chain pressures, and demand fluctuations. Shortly after the PPP was released in April 2020, CAT US applied for and obtained a PPP loan with a principal amount of approximately US$7.43 million and an annual interest rate of 1% to cover US employees' wages, utility expenses, and rent. CAT US was granted a full loan exemption of approximately US$7.52 million in August 2021 after submitting relevant supporting documents on the use of loan proceeds to the US government.

In November 2023, CAT US received an initial inquiry from the Ministry of Justice requesting the submission of documents and information relating to CAT US loan eligibility and loan exemptions. CAT US cooperated with the Ministry of Justice's request and submitted relevant materials.

Based on CAT US's conviction that its actions were appropriate and not at fault, after good-faith negotiations with the Ministry of Justice, CAT US decided to handle the matter through negotiation and settlement. This move was in the best interests of CAT US and its stakeholders. Negotiating a settlement avoids the costs, time, uncertainty and business disruptions associated with protracted legal procedures, and CAT US management can continue to focus on serving customers and promoting safety and innovation in general aviation.

The settlement required payment of US$117.72.68 million, plus interest calculated at an annual interest rate of 4% from June 23, 2026 to the date of payment. Furthermore, the agreement also contains provisions to release CAT US from any future civil liability or claim arising under the False Claims Act under PPP loans.

Neither the settlement amount nor the participation of CAT US in settlement negotiations shall constitute and shall not be interpreted as an admission of liability or misconduct by CAT US. The Company expects CAT US to pay the settlement amount as soon as possible in accordance with the instructions of the Ministry of Justice.

The Company and its subsidiaries are always committed to complying with applicable laws and regulations and implementing the principles of transparency, integrity and accountability in all operations.

The financial impact of entering into a settlement agreement is subject to review or review by the Company's auditors.