Monday, July 9, 2012
Hawker Beechcraft has announced that is has executed an exclusivity agreement with Superior Aviation Beijing Co. Ltd, a Beijing-based aerospace manufacturer, regarding a strategic combination. Should the transaction be completed, Superior intends to maintain Hawker Beechcraft’s existing operations while also investing substantial capital in the company and its business and general aviation product line.
In a news release, Hawker officials say the company entered into this agreement as part of its ongoing review of strategic options, which included continuing to operate as a standalone entity. Under the agreement, Superior will acquire Hawker Beechcraft for $1.79 billion and make payments over the next six weeks to support ongoing jet-related operations. Superior’s proposal would maintain Hawker Beechcraft’s U.S. headquarters, management team and employees.
“Superior has had a long-standing interest in the commercial aircraft business of Hawker Beechcraft, having first approached the company several years ago regarding a potential strategic partnership. With Superior’s previous experience operating a U.S. business and its demonstrated ability to quickly restore a business to profitability after emerging from Chapter 11, we believe a transaction with Superior would maximize value for Hawker Beechcraft and its stakeholders. Importantly, this combination would give Hawker Beechcraft greater access to the Chinese business and general aviation marketplace, which is forecast to grow more than 10 percent a year for the next 10-15 years. We look forward to working toward a definitive agreement,” said Hawker CEO Steve Miller.
“The decision to move forward with Superior was based on two key factors: the bid for the company was the most attractive we received during the strategic review process and the going-forward plan offered the most continuity for our business, allowing us to preserve jobs, product lines and our ability to maintain our commitments to our customers. Superior is committed to maintaining Hawker Beechcraft’s strong presence in the United States and retaining its current employee base and experienced management team, while positioning the company for future growth at home and abroad,” said Hawker Chairman Bill Boisture.
The transaction with Superior would not include Hawker Beechcraft Defense Company, which would remain a separate entity. HBDC is not part of the proposed transaction and neither ownership nor control of HBDC will transfer to Superior. In the event that HBDC is sold, up to $400 million of the $1.79 billion purchase price will be refundable to Superior.
Hawker Beechcraft declared bankruptcy in May and has been talking with several companies as potential buyers. Aviation analyst Richard Aboulafia with the Teal Group says this news isn't terribly promising.
"Superior is a parts company, at the end of the day. It's been purchased by the Chinese a couple years ago. So I'm a little bit skeptical about their ability to maintain Hawker as an on going aircraft manufacturer, particularly a business jet manufacturer," said Aboulafia.
Not everyone agrees. Aviation analyst and president of Foley Associates Brian Foley says the announcement is good news for the Wichita community.
"It's really a win-win situation. You know the Chinese market for general aviation aircraft is booming right now. So they have a need for products such as those made by Hawker Beechcraft. And the statement that they would keep operations in Wichita is a big win for those folks," said Foley.
Monday was the first the Wichita City Council learned of the proposed of Hawker Beechcraft by Superior. Wichita Mayor Carl Brewer issued the following statement:
"At this time, the City is working to gain a better understanding of how the proposed acquisition may impact our community. We understand the financial challenges Hawker has faced and are optimistic this acquisition could preserve jobs and help Hawker avoid difficult financial decisions. We're encouraged by Hawker's statement today which indicated Superior intends to maintain Hawker Beechcraft's U.S. headquarters, management team and employees and continue product development throughout its commercial lines. We will continue to closely monitor this situation, remain in communication with Hawker and work diligently to protect the City's investment and aviation jobs which are so vital to our community."