Thursday, March 29, 2012
Questions continue on the future of Hawker Beechcraft. Many of those questions come after a report Wednesday that Hawker is preparing to file for bankruptcy.
The company was pelted with questions from the business media about the Reuters story. And new today, Hawker was given a lower credit rating in part as a result of all these questions.
No sooner does the company announce new financing on Tuesday, which the company says is reason to celebrate, that the news turns negative on heightened concerns of a possible imminent bankruptcy filing.
Lenders agree to provide Hawker Beechcraft $120 million in funding for operations as the company continues working with those lenders on a comprehensive recapitalization.
Regarding the infusion of new capital, Hawker CEO Robert “Steve” Miller says he believes this agreement will stabilize the company’s current financial position and ensure Hawker Beechcraft continues manufacturing.
Miller was just brought into Hawker in February to pilot the plane maker through its financial instability. Miller is known as “The Turnaround Kid,” but even his presence raised the specter with some that he might use bankruptcy as a tool to fix Hawker’s financial problems.
Hawker is a highly leveraged company. It was purchased for $3.3 billion by Goldman Sachs partners and Onex from Raytheon in 2007.
The economic collapse particularly hurt general aviation and companies like Hawker.
The plane maker’s inability to sell enough planes to keep ahead of debt obligations is putting it in a stall.
That’s why the new loan, which includes a forbearance agreement to June 29, was needed. That leads to the speculation of bankruptcy.
‘KAKE Lawyer on the Line’ Roger Reidmiller says bankruptcy doesn’t spell the end.
"Ultimately, a bankruptcy is not always the death of a particular business. It can be merely a reorganization and a new life for that business," says Reidmiller.
And now, Standard and Poor’s Rating’s Services lowers its corporate credit rating on Hawker Beechcraft to “CC” from “CCC,” saying Hawker’s outlook remains negative.
The S & P statement says, “The negative outlook reflects the likelihood that we will lower the corporate credit rating to 'SD' (selective default) and the issue rating on the credit facility to 'D' if the company does not make its next payment due March 30, 2012."