Hawker Beechcraft files for Chapter 11 bankruptcy
WASHINGTON (Reuters) - Hawker Beechcraft Inc, the aircraft maker owned by Goldman Sachs Group Inc's (GS.N: Quote) private equity arm and Onex Corp OCX.TO, on Thursday filed for bankruptcy protection as part of a prearranged deal with lenders that will eliminate about $2.5 billion in debt and $125 million in annual interest expenses.
Hawker, which was bought by the private equity firms in 2007 for $3.3 billion, said the moves included a commitment for $400 million in debtor-in-possession financing, which would allow it to continue operating and paying employees, suppliers and vendors.
Hawker Chief Executive Steve Miller said the agreement would stabilize and improve the company's capital structure after three years of "aggressive transformational changes in all operational functions."
"Restructuring our balance sheet and recapitalizing the company in partnership with our debtholders will dramatically improve Hawker Beechcraft's ability to compete in a rapidly changing environment," he said.
Hawker said it was continuing to operate and would fill all orders for available products, including the recently announced sale of its T-6C trainer aircraft to Mexico. The company said it was also committed to continuing to compete for an U.S. Air Force contract to supply 20 light attack planes to Afghanistan.
Hawker said the agreement was reached with institutions representing more than two-thirds of the company's bank and senior bond debt.
Once the Chapter 11 filing is approved, equity ownership in Hawker Beechcraft will be transferred to holders of the secured debt, bond debt and certain other unsecured creditors.
Separately, Hawker Beechcraft's three pension plans are 56 percent funded, with $769 million in assets to cover about $1.4 billion in promised benefits for 20,000 workers and retirees, according to U.S. pension insurers.
The Pension Benefit Guaranty Corporation (PBGC) said in a statement that it was committed to working with the company and creditors to keep pensions going. Continued...