Hawker Beechcraft files for Chapter 11
Company reaches agreement with lenders to reduce debt
Hawker Beechcraft has filed for Chapter 11 with the US Bankruptcy Court for the Southern District of New York.
The company says it has reached agreement with financial institutions representing two thirds of senior secured lenders and senior bondholders on a financial restructuring plan which will eliminate about $2.5 billion in debt and cut $125 million of annual interest.
Hawker Beechcraft has obtained a commitment for $400 million in Debtor-in-Possession (DIP) financing. This cash will be used to pay advisers, employees, suppliers, vendors whilst it is in Chapter 11.
The company has a pre-arranged planned that needs to be approved by the bankruptcy court.
“We are pleased to have reached an agreement with our largest lenders and bondholders on a solution to stabilize and improve our capital structure,” said Steve Miller, chief executive officer of Hawker Beechcraft. “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.
“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.”
Goldman Sachs Partners and Onex’s equity will be transferred to holders of the company’s secured debt, bond debt and certain other unsecured creditors.
Hawker Beechcraft says customer deposits and construction payments will be secure and all orders will be fulfilled. It says that it expects to pay staff and suppliers during Chapter 11.
Miller added: “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,” said Miller. “The protections provided by the US 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.”
Law firm Kirkland & Ellis is Hawker Beechcraft’s legal representertive with Perella Weinberg Partners financial adviser. Alvarez & Marsal, the former employer of Hawker Beechcraft’s CFO, is restructuring adviser.
