Hawker Beechcraft files plan of reorganization, disclosure statement

By Caroline Salls

Pittsburgh, July 2 - Hawker Beechcraft, Inc. filed its plan of reorganization and related disclosure statement Saturday with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, the company filed bankruptcy to implement an agreement reached with a significant number of its senior secured lenders and senior bondholders on the terms of a financial restructuring.

Hawker Beechcraft said in a May 4 news release that the restructuring plan is designed to strengthen the company for the future and eliminate $2.5 billion in debt and about $125 million of annual cash interest expense.

Under the company's pre-arranged plan of reorganization, equity ownership in Hawker Beechcraft will be transferred to holders of its secured debt, bond debt and other unsecured creditors.

Restructuring terms

Under the restructuring term sheet:

• The company's debtor-in-possession facility is to be paid in full in cash;

• The company will enter into a new senior secured credit facility. Hawker Beechcraft said the new senior facility would be the other funded debt provided as treatment for claims under the plan;

• Holders of secured claims under a senior secured credit facility will share 81.1% of the equity in the reorganized company;

• Holders of unsecured claims, including unsecured deficiency claims under the company's senior secured credit facility, senior notes, senior subordinated notes and general unsecured claims, will share 18.9% of the equity in reorganized Hawker Beechcraft;

• Senior noteholders will have the ability to fund a cash out treatment option, under which each holder of a general unsecured claim in an allowed amount not exceeding $200 million can elect to receive a cash payment at a discount to the implied value of the equity that they would otherwise receive.

Hawker Beechcraft said this would result in the senior noteholders funding the cash out receiving the equity in the reorganized company instead; and

• Existing equity interests will be canceled, and holders of equity interests will not receive a distribution.

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

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