Hawker Beechcraft to emerge as standalone company; sponsor talks fail

By Caroline Salls

Pittsburgh, Oct. 18 - Hawker Beechcraft, Inc. plans to emerge from Chapter 11 bankruptcy as a standalone company after it failed to reach a plan sponsorship agreement with Superior Aviation Beijing Co., Ltd., according to a company news release.

"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," Hawker Beechcraft chief executive officer Robert S. Miller said in the release.

"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."

Business plan

Upon its emergence from Chapter 11, the company said it intends to rename itself Beechcraft Corp. and implement a business plan that focuses on its turboprop, piston, special mission and trainer/attack aircraft, which are the company's most profitable products, as well as on its high-margin parts, maintenance, repairs and refurbishment businesses.

"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," Hawker Beechcraft chairman Bill Boisture said in the release.

As part of this plan, the company said it is evaluating its strategic alternatives for the Hawker product lines in consultation with its key creditor constituents.

According to the release, the alternatives could include a sale of some or all of these product lines or a closure of the entire jet business if no satisfactory bids are received.

Plan of reorganization

Hawker Beechcraft said it will soon file an amended joint plan of reorganization and related disclosure statement with the U.S. Bankruptcy Court for the Southern District of New York. The disclosure statement hearing is expected to be scheduled for Nov. 15.

The company said its key economic stakeholders, including holders of a significant majority of its secured bank debt and unsecured bond debt, have already agreed to support the primary terms of the plan.

Under the amended plan, pre-bankruptcy secured bank debt, unsecured bond debt and general unsecured claims will be canceled.

Holders of those claims will receive equity in the reorganized company in the percentages negotiated by the major creditor groups at the time Hawker Beechcraft filed for bankruptcy.

In addition, the company's $400 million debtor-in-possession credit facility will be repaid in full in cash under the amended plan. Hawker Beechcraft said it will enter into a new financing package that will take effect upon emergence.

The company said it has more than enough liquidity to complete its restructuring and expects to enter into an extension of its DIP credit facility so that the maturity date coincides with Hawker Beechcraft's expected first-quarter 2013 emergence from Chapter 11.

Hawker Beechcraft is a Wichita, Kan.-based manufacturer of business, special mission, light attack and trainer aircraft. The company filed for bankruptcy on May 3. Its Chapter 11 case number is 12-11873.

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