Hawker Beechcraft Calls Off Chinese Merger As Reorg Advances

Hawker Beechcraft, Inc. today announced that it intends to emerge from Chapter 11 protection as a standalone company.

Wichita, Kansas-based Hawker Beechcraft, which has major operations in Little Rock, also announced that it is no longer pursuing its $1.79 billion merge with Superior Aviation Beijing Co., Ltd. because the parties could not reach agreement on terms for a partnership.

“We made the decision to proceed with the standalone Plan of Reorganization after determining that, despite our best efforts, the proposed transaction with Superior could not be completed on terms acceptable to the company,” said Robert S. “Steve” Miller, CEO of Hawker Beechcraft. “We are disappointed that the transaction did not come to fruition, but we protected ourselves by obtaining a $50 million deposit from Superior that is now fully non-refundable and property of the company. The go-forward business plan we have developed with our creditors ensures that we will emerge from this process in a strong operational and financial position, with an enhanced ability to compete well into the future.”
                                                                 
BUSINESS PLAN
Upon its emergence from Chapter 11, the company intends to rename itself Beechcraft Corporation and will implement a business plan that focuses on its turboprop, piston, special mission and trainer/attack aircraft – the company’s most profitable products – and on its high margin parts, maintenance, repairs and refurbishment businesses, all of which have high growth potential.

The company’s Little Rock facility is known for its production work on high-performance business jets and its maintenance division. It is unclear what the impact of restructuring could be on Little Rock, but it could be dour.

“As part of the plan, the company, in consultation with its key creditor constituents, is evaluating its strategic alternatives for the Hawker product lines, which could include a sale of some or all of those product lines, or a closure of the entire jet business if no satisfactory bids are received,” the company said in a news release today.

A call to a Hawker Beechcraft representative has not been returned.

In August, Hawker Beechcraft laid off 170 workers in Little Rock.

“Beechcraft Corporation will emerge as the world’s leading designer and manufacturer of turboprop, piston and trainer/attack aircraft with the largest global customer support network in the industry. Our business strategy will focus on growing our key existing product lines: high performance single and twin engine piston and turboprop aircraft, uniquely missionized variants for the global special mission market, and multi-role light attack and trainer aircraft systems, as well as the product development opportunities within these segments,” said Bill Boisture, Chairman of Hawker Beechcraft Corporation.

PLAN OF REORGANIZATION
Hawker Beechcraft will soon file an amended Joint Plan of Reorganization (POR) with the U.S. Bankruptcy Court for the Southern District of New York. The company will also file an amended Disclosure Statement that describes the details of the proposed POR. The company intends to schedule a hearing on the adequacy of the Disclosure Statement on Nov. 15, 2012.

Hawker Beechcraft’s key economic stakeholders, including holders of a significant majority of the company’s secured bank debt and unsecured bond debt, have already agreed to support the primary terms of the POR subject to Bankruptcy Court approval of the amended Disclosure Statement.

The company said it has more than sufficient liquidity to complete its restructuring and expects to enter into an extension of its credit facility, the maturity date of which would coincide with its anticipated emergence from Chapter 11 in the first quarter of 2013.

Court approval of the adequacy of the Disclosure Statement will allow Hawker Beechcraft to begin solicitation of votes for confirmation of the POR.