July 3, 2012
By Alton K. Marsh
Hawker Beechcraft has filed a broad outline of its reorganization plan with the federal bankruptcy court for the southern district of New York. Two-thirds of the company’s 18 creditors agreed to the plan in advance, and now it is up to the court to approve it or send it back. The possibility of selling the company to a new owner now plays a greater role than company officials had indicated in past statements.
The plan could substantially reduce Hawker Beechcraft’s debt of $2.552 billion, but not eliminate it. In fact, an additional loan for “exit financing” will be required. It provides a broad overview, but no details such as the specific aircraft models to be discontinued. The Wichita Eagle said details will come later. There could potentially remain hundreds of millions of dollars in debt even after the plan takes effect.
Out of 15 potential buyers, only three are based in the United States. That group has been reduced to six potential suitors who have been asked to send revised proposals. Most have been allowed to examine financial documents of the company. Assuming all three United States bidders were in the final group, that means there is a 50-50 chance the company could remain in American hands. The intent is to sell the company intact, although some aircraft would be discontinued.
Court proceedings can be followed here.
In past statements, Hawker Beechcraft officials appeared to downplay the possibility of a sale, saying the acceptance of bids was a routine requirement for bankruptcy procedures. The court documents filed June 30, a Saturday, indicate it is better for creditors if the company is sold intact rather than parted out under any future Chapter 7 procedures, should it come to that. Current Chapter 11 procedures allow the company time to reorganize.
Hawker Beechcraft must, according to the documents, “… obtain approval of a disclosure statement by August 31, 2012, must confirm a plan of reorganization by November 15, 2012, and must consummate a plan of reorganization by December 15, 2012.”
Secured lenders will receive 81 percent of the company’s equity when it emerges from bankruptcy. Hawker Beechcraft was bought in 2007 by Onex Corp. and Goldman Sachs Group in a $3.3 billion buyout.
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