Hawker Beechcraft Corp. has announced its plans to file for voluntary chapter 11 bankruptcy in an attempt to restructure its debt. The company further stated that their restructuring plan is supported by most of its senior secured lenders, and also by senior bondholders, who have agreed to lend the company $400 million for debtor-in-possession financing.
Hawker is based in Wichita, Kansas, and is owned by Goldman Sachs Group Inc’s (GS.N) private equity arm and Onex Corp (OCX.TO). The struggling business aircraft manufacturer traces its roots to Beech Aircraft Corp., a company that was founded by Walter and Olive Ann Beech, who began making aircraft in the 1930s.
The restructuring will serve to eliminate around $2.5 billion in debt, as well as almost $125 million in annual cash interest expenses. The $400 million financing from bondholders will help the company continue to pay employees, vendors, and other people who they owe money to.
Hawker Beechcraft currently employs about 7,400 people, roughly 4,700 of whom work at its Wichita facility. The company also has factories in Little Rock, Ark., Britain, and Mexico. They also have 100 other service centers worldwide. The company has struggled in recent years, because there has been lees of a demand for military planes and business jets.
Steve Miller, Hawker’s chief executive officer, said in a statement on Thursday that:
“We are pleased to have reached an agreement with our largest lenders and bondholders on a solution to stabilize and improve our capital structure. 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.”
Hawker Beechcraft Corp. has promised to continue normal business operations, and will continue to fill all orders for available products.