Hawker Beech Gets Relief, Bankruptcy Rumors Persist
Although Hawker Beechcraft was thrown a $120 million lifeline and given some breathing room by creditors earlier this week, that hasn't quelled a media death watch on the Wichita planemaker. On Tuesday, Hawker Beech announced that a group of creditors representing about 70 percent of the company's debt load had agreed to defer some interest payments and ignore some covenants until June 29. The company said it would use the money saved and the time to put a reorganization plan in place. On Thursday, Reuters ran a story quoting unnamed sources as saying Hawker Beech was getting ready to file for bankruptcy. The story was quickly picked up by other media that quoted Reuters as their sole source. A few said they too had been told by unnamed sources the "pre-arranged bankruptcy" was in the works. Hawker Beechcraft spokeswoman Nicole Alexander said the company wouldn't discuss the latest stories but stressed efforts to turn the company around. "We have no comment on the Reuters story," Alexander said. "The news out of the company is included in Tuesday's news release, so I'll refer you back to it and more explicitly to the point that Hawker Beechcraft is working together with its lenders toward a comprehensive recapitalization to better position the company for the future."
Hawker Beechcraft was purchased by Goldman Sachs and Canadian equity company Onex Corp. from Raytheon for $3.3 billion in 2007. At that time, the company, like all other business jet makers, was compiling enormous backlogs from a seemingly insatiable market. After about 18 months of recession, in which those backlogs all but disappeared, the new owners wrote down the value of the company by 85 percent. Hawker Beech has laid off 2,500 workers and has struggled of late. It was close to violating covenants from some of its lenders that required it to maintain a positive cash flow and it's likely those covenants that have been forgiven. Meanwhile, financial rating agency Standard and Poor's has downgraded Hawker Beechcraft to a CC credit rating from CCC. On Wednesday the company said it had sold 10 King Airs, worth a total of $50 million, at the Asian Business Aviation Convention and Exhibition (ABACE).