BY MICHAEL J. DE LA MERCED AND PETER LATTMAN
The business jet maker Hawker Beechcraft is readying a bankruptcy filing, people briefed on the matter said on Wednesday, dealing a blow to its private equityowners, Goldman Sachs and Onex Partners.
Hawker, which is based in Wichita, Kan., said on Tuesday that it had obtained $120 million in additional loans to buy it time to fix its balance sheet. In exchange, a majority of the company’s debt holders agreed to defer some interest payments and grant relief from loan covenants.
One of the options Hawker and its advisers are considering is a prearranged Chapter 11 filing that has the consent of those lenders, principally a number of hedge funds, said these people, who spoke on condition of anonymity. Among them are the hedge funds Centerbridge Partners and Angelo Gordon.
A Hawker bankruptcy would be put an end to a 2007 private equity deal that was troubled almost from the start. The company was formed when Goldman and Onex, the largest private equity firm in Canada, bought Raytheon’s private jet unit for $3.3 billion, hoping to seize on the fervor for private jets.
Hawker hit rough times soon afterward, as a recession wiped out many discretionary expenditures like private jets. The company laid off about 2,500 employees, and lost billions of dollars as customers like NetJets canceled orders for new aircraft.
Within two years of the leveraged buyout, Goldman’s buyout arm told investors that it had written down the value of the company by 85 percent.
As of Sept. 30, Hawker had more than $2 billion in long-term debt and $146.7 million in cash and short-term investments. It posted an $88.6 million loss for the third quarter of last year, its seventh in a row as its revenue slid to $518.8 million.
A representative for Hawker Beechcraft declined to comment. News of a potential bankruptcy filing was reported earlier by Reuters.
Hawker has made several efforts to fix its business, including by hiring the boutique investment bank Perella Weinberg Partners and the law firm Kirkland & Ellis. Last month, Hawker named Robert S. Miller, the former head of Delphi Automotive and a restructuring specialist, as its chief executive.
Mr. Miller said in a statement on Tuesday that while the company had taken steps to improve its operations, its debt load is weighing heavily on its turnaround effort.
“We believe this agreement will stabilize the company’s current financial position and ensure Hawker Beechcraft continues manufacturing the best airplanes for our customers and providing first-class service and support,” he said.
A bankruptcy filing of Hawker would be another loss for Goldman’s buyout arm, which is contending with a number of troubled investments. Chief among them is Energy Future Holdings, the Texas utility giant formerly known as TXU, whose value has plummeted along with the price of natural gas. Goldman’s real estate private equity funds have also struggled.
The unit’s own future is uncertain, given new financial regulations to restrict a bank’s ownership of investment operations like private equity.
The new status symbol for China's ultra rich businessmen: a private jet. But before this fad can truly take off, authorities have to loosen up strict regulations governing the domestic airspace. By Kristine Lim ChannelNewsAsia.com SHANGHAI: China is gearing up for burgeoning growth in its business aviation market as it plans to build its...
China is Getting Easier for Business Aviation But Flight Planning Expertise Still Makes Big Difference The new status symbol for China's ultra rich businessmen: a private jet. But before this fad can truly take off, authorities have to loosen up strict regulations governing the domestic airspace. AIN ONLINE by CURT EPSTEIN With business...
July 6, 2022· Covid concerns may be easing, interest rates rising, and the stock market falling, but prospective business buyers of private jets are highly motivated to make their purchases this year because the "free ride" of 100% depreciation in the first year of use, afforded by the 2017 Tax Act, will end December 31, 2022...
Between exhausting lines at security and countless flight delays and cancellations, the concept of a “quick flight” no longer exists. In reaction, many corporations are taking matters into their own hands by investing in corporate jets to fly executives and employees on business trips. For many companies, it is the time savings that...
Private Aircraft Trends Twice as Many First-Time Buyers Looked for Private Jets at End of 2020 vs. 2019; Advice on Aircraft for First-Time Private Jet Buyers North Palm Beach, FL, February 17, 2021 – Driven by continuing concerns about Covid-19, the resulting cuts in commercial air service, and the possible end of Trump-era tax...
Increasing Use of Sustainable Aviation Fuel for Private Jets Expected to Motivate More Buyers “The development of Sustainable Aviation Fuel can help reduce solid waste, clean the air, reduce our use of fossil fuels, and lower carbon emissions, but it will also enable aviation to continue to grow on a far more sustainable basis,” said...
North Palm Beach, FL, Aug 10, 2021 – The explosive growth in the private jet charter business combined with ongoing consolidation among charter operators has created an environment where an increasing number of high-net-worth individuals and businesses are rushing to purchase their first private jet before the end of Trump-era tax...
