Hawker Ends Talks With Chinese Company, To Become Standalone Company

By: News Release Email
By: News Release Email

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October 18, 2012

Hawker Beechcraft, Inc. today announced that it intends to emerge from Chapter 11 protection as a standalone company. Hawker Beechcraft also announced that it is no longer pursuing a transaction with Superior Aviation Beijing Co., Ltd. because the parties could not reach agreement on the terms of a Plan Sponsorship Agreement.

KAKE aviation reporter Chris Frank said the intention is for Beechcraft to focus on its turboprop, piston, special mission and trainer-attack aircraft. Beechcraft will also focus on high margin parts, maintenance, repairs and refurbishment business.

The announcement also means the end of Hawker Beechcraft's jet production.

Statement from Hawker Beechcraft;

Robert S. “Steve” Miller, CEO of Hawker Beechcraft, Inc., said, “We made the decision to proceed with the standalone Plan of Reorganization after determining that, despite our best efforts, the proposed transaction with Superior could not be completed on terms acceptable to the company. We are disappointed that the transaction did not come to fruition, but we protected ourselves by obtaining a $50 million deposit from Superior that is now fully non-refundable and property of the company. The go-forward business plan we have developed with our creditors ensures that we will emerge from this process in a strong operational and financial position, with an enhanced ability to compete well into the future.”

Upon its emergence from Chapter 11, the company intends to rename itself Beechcraft Corporation and will implement a business plan that focuses on its turboprop, piston, special mission and trainer/attack aircraft – the company’s most profitable products – and on its high margin parts, maintenance, repairs and refurbishment businesses, all of which have high growth potential.

Bill Boisture, Chairman of Hawker Beechcraft Corporation, said, “Beechcraft Corporation will emerge as the world’s leading designer and manufacturer of turboprop, piston and trainer/attack aircraft with the largest global customer support network in the industry. Our business strategy will focus on growing our key existing product lines: high performance single and twin engine piston and turboprop aircraft, uniquely missionized variants for the global special mission market, and multi-role light attack and trainer aircraft systems, as well as the product development opportunities within these segments.”

As part of this plan, the company, in consultation with its key creditor constituents, is evaluating its strategic alternatives for the Hawker product lines, which could include a sale of some or all of those product lines, or a closure of the entire jet business if no satisfactory bids are received.

Plan of Reorganization

Hawker Beechcraft will soon file an amended Joint Plan of Reorganization (POR) with the U.S. Bankruptcy Court for the Southern District of New York. The company will also file an amended Disclosure Statement that describes the details of the proposed POR. The company intends to schedule a hearing on the adequacy of the Disclosure Statement on Nov. 15, 2012.

Hawker Beechcraft’s key economic stakeholders, including holders of a significant majority of the company’s secured bank debt and unsecured bond debt, have already agreed to support the primary terms of the POR subject to Bankruptcy Court approval of the amended Disclosure Statement. Under the POR, pre-petition secured bank debt, unsecured bond debt, and general unsecured claims will be canceled and holders of such claims will receive equity in the reorganized company in the percentages negotiated by the major creditor groups at the time the company commenced its Chapter 11 proceedings.

The POR contemplates that Hawker Beechcraft’s $400 million debtor-in-possession (DIP) post-petition credit facility will be repaid fully in cash. In addition, the company will enter into a new financing package that will go into effect upon its emergence from Chapter 11.

The company has more than sufficient liquidity to complete its restructuring and expects to enter into an extension of its DIP post-petition credit facility, the maturity date of which would coincide with its anticipated emergence from Chapter 11 in the first quarter of 2013. Court approval of the adequacy of the Disclosure Statement will allow Hawker Beechcraft to begin solicitation of votes for confirmation of the POR.

The Machinists Union has also released a statement on the developments, saying:

It is important to note that today’s developments do not cancel or modify the terms of the pension agreement that was ratified by IAM members in August. As the Hawker bankruptcy case unfolds, the IAM will continue to monitor the situation and act aggressively on behalf of our members, their families and our retirees.


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