UPDATE 1-Hawker Beechcraft readies bankruptcy filing – sources

Wed Mar 28, 2012

By Soyoung Kim and Andrea Shalal-Esa

http://www.reuters.com/article/2012/03/28/hawkerbeechcraft-idUSL2E8ESXII20120328



NEW YORK/WASHINGTON D.C., March 28 (Reuters) - Hawker Beechcraft Inc, the aircraft manufacturer owned by Goldman Sachs Group Inc's private equity arm and Onex Corp, is preparing to file for bankruptcy protection, according to people familiar with the matter.

Hawker, which was bought in 2007 for $3.3 billion by the private equity firms, is negotiating a prearranged bankruptcy with its largest lenders, which include Centerbridge Partners, Angelo Gordon and Capital Research & Management, the sources said.

Centerbridge, a New York-based investment firm focused on leveraged buyouts and distressed investments, is the biggest lender, the sources said.

Hawker and Onex declined to comment. Goldman Sachs and the lenders were not immediately available for comment.

These lenders would also likely provide debtor-in-possession (DIP) financing to allow Hawker to continue to operate in bankruptcy, the sources said. One of the sources said the DIP financing is currently expected to be less than $500 million, but cautioned the number has not been finalized and could change.

Goldman Sachs Capital Partners, the bank's private equity fund, and Canada's largest buyout firm, Onex, bought Raytheon Aircraft Co from Raytheon Co in early 2007, at the height of the buyout boom, and renamed it Hawker Beechcraft.

Hawker said on Tuesday it reached a deal with lenders that will provide a $120 million loan and defer the company's obligations to make certain interest payments.

This forbearance agreement, scheduled to expire at the end of June, would provide Hawker with more time to finalize the details of a pre-arranged bankruptcy with the main lenders, the sources said.

The company, which has been seeking to restructure debt as a soft economy and competition hurt demand for its business aircraft, hired turnaround specialist Steve Miller as chief executive officer earlier this year.

Perella Weinberg Partners and law firm Kirkland & Ellis LLP are the financial and legal advisers for Hawker.

Hawker Beechcraft's small and mid-sized business jets compete against models from rivals such as General Dynamics Corp's Gulfstream and Textron Inc's Cessna.