Hawker Beechcraft considers offer from Beijing, China-based Superior Aviation

n the latest development in its Chapter 11 bankruptcy reorganization process, Hawker Beechcraft Inc. announced on June 17 that the U.S. Bankruptcy Court for the Southern District of New York has approved the company’s motion to enter into exclusive negotiations with Superior Aviation Beijing Co. Ltd., a Beijing, China-based aerospace manufacturer.

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In the latest development in its Chapter 11 bankruptcy reorganization process, Hawker Beechcraft Inc. (Wichita, Kan.) announced on June 17 that the U.S. Bankruptcy Court for the Southern District of New York has approved the company’s motion to enter into exclusive negotiations with Superior Aviation Beijing Co. Ltd., a Beijing, China-based aerospace manufacturer. Approval of this motion allows Hawker Beechcraft to spend up to 45 days exclusively negotiating with Superior regarding a “strategic combination” to preserve jobs and product lines.

Hawker Beechcraft, a manufacturer of business, special-mission, light-attack and trainer aircraft that is headquartered in Wichita, Kan., with operations in Little Rock, Ark.; Chester, U.K.; and Chihuahua, Mexico, is currently owned by Goldman Sachs Group Inc. (New York, N.Y.) and Onex Corp. (Toronto, Ontario, Canada). The pair bought Hawker Beechcraft for $3.3 billion in 2007. The Chapter 11 documents filed in a Manhattan, N.Y., U.S. Bankruptcy Court listed more than $1 billion in assets and debt. The company reported net losses totaling more than $900 million in the past two years as U.S. military contracts and plane sales declined, leading to the company’s bankruptcy filing in early May. As part of the agreement, Superior was to make payments over the month following the June announcement to sustain Hawker Beechcraft’s jet business. At HPC press time, an initial deposit of $25 million was to be followed by a second in the same amount, payable within 30 days. The transaction with Superior would not include Wichita-based Hawker Beechcraft Defense Co. (HBDC), which will continue to operate, separately, its successful T-6 trainer program and pursue the final certification of the AT-6 light attack aircraft.

Although news outlets in the U.S. have reported efforts by the International Association of Machinists and Aerospace Workers to block the sale on grounds that China would, via the sale, lay hold of proprietary aerospace technology that is now limited to U.S. aircraft manufacturers, the move has had little support in the U.S. Congress, even from the Kansas delegation. That said, any agreement reached with Superior will be subject to approval by the Committee on Foreign Investment in the U.S. (CFIUS) and other regulatory agencies. Further, any definitive agreement with Superior would be terminated if another potential purchaser were to succeed in the upcoming mandatory competitive bidding process that will be overseen by the U.S. Bankruptcy Court.

If negotiations with Superior are not concluded in a timely manner, then Hawker Beechcraft will seek confirmation of the Joint Plan of Reorganization it filed with the U.S. Bankruptcy Court on June 30, which contemplates Hawker Beechcraft emerging as a “standalone entity with a more focused portfolio of aircraft.” More specifically, under the Standalone Plan, the company would wind down its jet-related businesses, a process that already would have been underway if Superior had not made an offer. 

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