Hawker Beechcraft Inc., the bankrupt business-jet maker owned by Goldman Sachs Group Inc. (GS:US) and Onex Corp. (OCX), received court permission to negotiate exclusively with bidder Superior Aviation Beijing Co.
Allowing the company 45 days to negotiate “really doesn’t change the status quo,” U.S. Bankruptcy Judge Stuart Bernstein said at a hearing today in Manhattan. Bernstein approved the agreement over the objections of the International Association of Machinists and Aerospace Workers.
The exclusivity agreement enables Hawker to negotiate, for as long as 45 days, a binding stalking-horse agreement to sell certain assets, according to court papers. As part of the accord, Superior will pay Hawker as much as $50 million to maintain product lines that the jet maker would “likely discontinue but for Superior’s interest in acquiring them,” Hawker said in court papers.
The jet maker agreed to sell itself to Superior for $1.79 billion. Superior will make payments to help keep Hawker afloat until the deal is completed, the companies said July 9. The first payment of $25 million will be made this week.
Without the Superior bid “we would be in the process of shutting down the jet business,” Hawker attorney Patrick J. Nash Jr. of Kirkland & Ellis LLP in Chicago, told the court. It takes $8 million each week to run the jet business, Nash said, and “$24 million of the initial $25 million is effectively spent by the end of next week.”
While Hawker suggested the Superior proposal “‘could preserve thousands of American jobs,’ there is nothing in the record to support such a belief,” the International Association of Machinists and Aerospace Workers said yesterday in a court filing.
“We will aggressively work to keep jobs in the United States by continued production of the Hawker and Beechcraft product lines,” Superior Chief Executive Officer Tim Archer said in a statement regarding the ruling.
Hawker sought bankruptcy protection in May citing lower demand for private jets following the recession and constrained U.S. defense spending. The plane maker’s debt included a term loan and notes used for the portion of its $3.3 billion takeover in 2007 that wasn’t covered by $1 billion in cash from buyers Goldman Sachs and Onex.
Superior is 60 percent owned by Shenzong Cheng and his wife, Qin Wang, and 40 percent owned by Beijing E-Town International Investment & Development Corp., a company controlled by the Beijing municipal government. Cheng and Wang first visited Hawker in 2006, according to the statement.
The case is In re Hawker Beechcraft Inc., 12-11873, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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