Quantum Corp has told Blocks & Files it believes it is eligible for the $10m US Paycheck Protection Program loan it took in April, after being asked (PDF) on Friday by a US House of Representatives committee to repay it.
It told B&F the loan was “saving American jobs at Quantum” and said it was looking forward to “engaging with the committee”.
The House of Representatives Select Subcommittee on the Coronavirus Crisis, chaired by South Carolina Democrat Representative James Clyburn, wants the money returned so smaller firms can benefit from the Paycheck Protection Program (PPP) loans instead. It wrote to five companies on May 8: Evo Transportation & Energy Services, Gulf Island Fabrication, MiMedx Group, Quantum and Universal Stainless & Alloy Product, requesting they return the money.
The letter said: “Since your company is a public entity with a substantial investor base and access to capital markets, we ask that you return these funds immediately.
‘“Returning these funds would allow truly small businesses — which do not have access to alternative sources of capital — to obtain the emergency loans they need to avoid layoffs, stay in business, and weather the economic disruption caused by the coronavirus crisis.”
MiMex and Evo Transportation Responses
MiMex Group decided to return the cash. Its statement said it had: “implemented numerous cost containment measures, including a temporary gradated reduction in compensation for all salaried employees in order to avoid layoffs. … While registered as a public company, MiMedx is currently delisted from NASDAQ and does not have access to the public markets.”
Nevertheless it is returning the cash.
Evo Transportation & Energy Services did not do so. A statement said: “EVO’s stock is highly illiquid and rarely trades, EVO does not have access to capital markets (it sought unsuccessfully in March to raise equity from third parties in a private placement) and presently nearly all of EVO’s investors are unable to sell shares. EVO’s small market float is measured in thousands of dollars, not hundreds of millions of dollars. All of these factors support EVO’s application to the PPP which was consistent with the letter and spirit of the law. EVO has and will continue to use the PPP proceeds for payroll.
“EVO is proud of the critical and essential services provided by its workforce which has continued to perform day in and day out delivering all over the country, including in some of the areas hardest hit by the coronavirus pandemic. The PPP proceeds permitted EVO to fulfill its obligations to do this important work. Return of the proceeds could jeopardize EVO’s survival and the more than 1,600 jobs that exist through EVO’s continued operation.”
A Quantum spokesperson told us: “We have just recently received the letter sent by Chairman Clyburn. Quantum will be responding and looks forward to engaging with the Committee.
“Quantum believes it owes a duty to its American employees who would lose their jobs if Quantum returned its PPP loan to demonstrate why Quantum not only falls within the technical eligibility requirements of the PPP loan program, but also falls squarely within the spirit of what was intended by the Cares Act.
“This PPP loan is saving American jobs at Quantum — without it we would most certainly be forced to reduce headcount. We owe it to our employees – who’ve stuck with us through a long and difficult turnaround – to do everything we can to save their jobs during this crisis.”
Hard times make for hard choices.