HawkerBeechcraft, the troubled jet maker owned by Goldman Sachs Capital Partners and Onex, has agreed to sell itself to a Chinese aviation company for $1.79 billion.
The potential sale to aerospace manufacturer Superior Aviation Beijing could secure Hawker’s future after it filed for bankruptcy protection this year. Superior would keep Hawker Beechcraft’s existing operations, the Kansas-based company said in a statement on Monday.
Goldman and Onex, the Canadian private equity firm, bought Hawker Beechcraft in 2007 for $3.3 billion, loading the company up with debt at the height of the market for business jets. The industry has suffered since the onslaught of the financial crisis, with global sales of general aviation aircraft tumbling from 4,272 in 2007 to about 1,865 last year, causing the company to struggle to repay its creditors.
Hawker in May filed for Chapter 11 bankruptcy protection and began reviewing options, including continuing as a standalone business or an outright sale. A reorganization plan filed in June would give control of the company to secured creditors, canceling out the equity stakes owned by Goldman and Onex.
“Superior has had a longstanding interest in the commercial aircraft business of Hawker Beechcraft, having first approached the company several years ago regarding a potential strategic partnership,” said Robert Miller, Hawker’s chief executive. The Chinese company has “demonstrated ability to quickly restore a business to profitability after emerging from Chapter 11”, he said.
The deal with Superior would also give Hawker “greater access to the Chinese business and general aviation marketplace, which is forecast to grow more than 10 percent a year for the next 10-15 years”, Mr Miller said.
Superior is 40 percent owned by a company controlled by the Beijing city government, according to Hawker.
The deal does not include Hawker Beechcraft Defense, which makes T-6 turboprops used by the U.S. Air Force for basic pilot training. That business could still draw interest from competing jet-makers, such as Textron or Mahindra.
Superior will have 45 days to do its due diligence on Hawker and will have to make payments to support the business in the interim, according to the terms of Monday’s so-called “exclusivity agreement”. If the two parties do negotiate a definitive agreement, the deal would still be subject to approval by the U.S. bankruptcy court and a competitive auction process that could see further bids.
If a deal is not reached, Hawker Beechcraft said it plans to ask the bankruptcy court to approve the reorganization plan it filed last month.