March 28, 2012
Financially troubled Hawker Beechcraft Corp. finally received some good news March 27. The company reached an agreement with lenders Centerbridge Partners, Angelo Gordon & Company, and Capital Research & Management to provide Hawker with $120 million through an incremental term loan agreement. Without this infusion, Hawker Beechcraft likely would have defaulted on a $28.3 million interest payment due April 1 on debt accrued under a revolving credit line. Some experts were predicting the company’s imminent bankruptcy.
In a press release, Hawker said, “The company intends to use the proceeds of this loan to fund its ongoing operations as Hawker Beechcraft continues working with its lenders toward a comprehensive recapitalization. As part of this agreement, lenders currently holding approximately 70 percent of Hawker Beechcraft bank debt have agreed to defer the company’s obligation to make certain interest payments on the company’s senior secured revolving and term loans when due, and have granted the company relief from certain existing loan covenants. This forbearance agreement is scheduled to expire on June 29, 2012.”
Robert S. (Steve) Miller, Hawker Beechcraft’s newly appointed CEO, said, “…The company has been operating with a debt load that is restricting its ability to succeed … .We believe this agreement will stabilize the company’s current financial position and ensure Hawker Beechcraft continues manufacturing the best airplanes for our customers and providing first-class service and support. At the same time, the agreement provides Hawker Beechcraft and its lenders with additional time and flexibility to work together to recapitalize the company and better position Hawker Beechcraft for the future.”
That said, Hawker Beechcraft’s path ahead remains a challenging one. The company has another $1.4 billion of debt that comes due in 2014.
The manufacturer was hit hard by the recession, with sales dropping, costs of sales increasing, massive layoffs, a downgraded debt rating, and pension obligations that were underfunded. While the new liquidity and forbearance are certainly welcome news, Hawker Beechcraft must meet certain requirements as part of the deal. According to a report in The Wichita Eagle, Hawker must make $112.5 million in adjusted earnings before interest, taxes, depreciation, and amortization this year; and the company must maintain $162.5 million of liquidity, or cash plus available credit.
March 7, 2014 ePilot Training Tip: 'Arrival or through flight'
The GAO released its report “Aviation Workforce: Current and Future Availability of Airline Pilots,” and general aviation has a strong interest in its findings.
A documentary film tells the story of the “first to fly and the first to die for the United States in the Great War.”
AOPA thanks our members for their continued support in protecting the freedom to fly.