Hawker Beechcraft filed for federal bankruptcy protection May 3, simultaneously announcing plans to continue operation under new ownership.
The Wichita, Kan., aircraft maker entered a “pre-arranged” bankruptcy proceeding, with agreements in place to exchange debt—the company owes about $2.5 billion, according to recent filings and a news release—for equity in the company. The legal maneuver essentially promises to transfer ownership from Goldman Sachs Capital Partners and Onex, which bought Raytheon Aircraft Co. from the Raytheon Company in 2007, and then renamed the company Hawker Beechcraft. The deal remains subject to court review and closing agreements.
CEO Robert “Steve” Miller, a corporate turnaround specialist hired in February, issued written statements in conjunction with the company’s announcement of a $400 million debtor in possession financing package that will allow Hawker Beechcraft to continue operating while the Chapter 11 process is under way.
“We are pleased to have reached an agreement with our largest lenders and bondholders on a solution to stabilize and improve our capital structure,” Miller said in a news release. “In the last three years, the company has made aggressive transformational changes in all operational functions, and today’s announcement represents the next step forward.”
The Chapter 11 bankruptcy petition was filed in the Southern District of New York, and provided few details of the future arrangements.
The company stated operations will continue “without interruption,” and specifically that deposits and progress payments will remain secure, with all orders to be fulfilled. The $400 million loan package is enough to keep the company stable during the planned restructuring, which a majority of creditors have endorsed, the company said.
“As we have worked to develop this long-term plan to recapitalize the company and strongly position Hawker Beechcraft for the future, our employees have continued to build the best airplanes in the world and provide our owners with the most comprehensive global customer support in the industry,” Miller said in the news release. “The protections provided by the U.S. Bankruptcy Code and the financing commitment we have obtained put Hawker Beechcraft in a great position to continue to do so throughout the restructuring process.”
Hawker Beechcraft has been shedding payroll and struggling to stay afloat since the Great Recession struck in 2008. Most recently, company officials announced the elimination of 350 jobs in Wichita, following a November layoff of 300, and hundreds more before that. The company lost more than $630 million in 2011, according to a Securities and Exchange Commission filing in April that called into question the company’s ability to continue operation.
The company said there would be no impact on research and development projects, such as the Hawker 400XPR jet, an update of the Hawker 400A and Beechjet 400A models. A spokesperson said the company name was not expected to change.