CON AERO TECH (00232) subsidiary CAT US has entered into a settlement agreement with the U.S. Department of Justice.

CON AERO TECH (00232) announced that its indirectly wholly-owned subsidiary, Continental Aerospace Technologies, Inc. (CAT US), entered into a settlement agreement (the Settlement Agreement) with the U.S. Department of Justice (the Department) on July 31, 2026 (Central Daylight Time). The agreement pertains to the PPP loan obtained by CAT US and subsequently forgiven under the U.S. Coronavirus Aid, Relief, and Economic Security Act (the CARES Act). This settlement is to be kept confidential. On August 3, 2026 (Central Daylight Time), the Department informed CAT US that it had no objections to the company disclosing the settlement. Upon receiving confirmation of the Departments non-objection, CAT US immediately notified the company to disclose the settlement. During the COVID-19 pandemic in 2020, CAT US faced significant operational disruptions, supply chain pressures, and fluctuations in demand, similar to many manufacturers. Shortly after the PPP was announced in April 2020, CAT US applied for and received a PPP loan of approximately $7.43 million, at an annual interest rate of 1%, to cover employee salaries, utility expenses, and rent for its U.S. staff. After submitting relevant documentation on the use of loan proceeds to the U.S. government, CAT US received a full forgiveness of the loan amounting to approximately $7.52 million in August 2021. In November 2023, CAT US received an initial inquiry from the Department regarding the submission of documents and information related to CAT US's loan eligibility and loan forgiveness. CAT US complied with the Department's request and submitted the relevant information. Based on CAT US's confidence in the appropriateness of its actions and the absence of fault, after good faith negotiations with the Department, CAT US decided to settle the matter through negotiation, which aligns with the best interests of CAT US and its stakeholders. The negotiated settlement will avoid the costs, time, uncertainty, and business disruption associated with lengthy legal proceedings, allowing CAT US management to continue focusing on serving customers and promoting safety and innovation in general aviation. The settlement agreement requires a payment of $11,772,680, plus interest calculated at an annual rate of 4% from June 23, 2026, until the payment date. The agreement also includes provisions releasing CAT US from any future civil liabilities or claims arising under the False Claims Act related to the PPP loan. Neither the settlement payment nor CAT US's participation in the settlement negotiation constitutes or should be interpreted as CAT US's admission of liability or wrongdoing. The company anticipates that CAT US will promptly make the settlement payment in accordance with the Departments instructions. The company and its subsidiaries remain committed to complying with applicable laws and regulations, and to upholding the principles of transparency, integrity, and accountability in all operations. The financial impact of entering into the settlement agreement is subject to review or audit by the companys auditors.