A much-needed capital injection by three new investors will give airframer Hawker Beechcraft additional time to recapitalise its operations in the midst of a continuing weak light jet market.
While some analysts had speculated that the Wichita-based maker of piston, turboprop and business jet aircraft was on the verge of having to file for Chapter 11 bankruptcy protection in the face of nearly $30 million in loan interest payments due on 1 April, the $120 million in "additional liquidity" announced on 27 March appears to have stabilised the company in the short term.
"The company intends to use the proceeds of this loan to fund its ongoing operations, as Hawker Beechcraft continues working with its lenders toward a comprehensive recapitalisation," the company said in a statement.
"As part of the agreement, lenders currently holding approximately 70% of Hawker Beechcraft bank debt have agreed to defer the company's obligation to make certain interest payments on the company's senior secured revolving and term loans when due, and have granted the company relief from certain existing loan covenants," the statement continued. "This forbearance agreement is scheduled to expire on June 29, 2012."
Hawker Beechcraft's majority owners are investment firms Goldman Sachs and Onex.
New investors include US firms Centerbridge Partners, and Angelo, Gordon & Co, both investments firms focused on leveraged buyouts and distressed securities. The third investor is Capital Research and Management.
Hawker Beechcraft officials describe the new financing and forbearance agreement as "one more step in the company's transformation".