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Robert S. (“Steve”) Miller, CEO of Hawker Beechcraft,
Inc., said, “Today’s ruling marks the final significant
step in the restructuring process. Throughout this
process, we have been guided by the goal of emerging in
a strong operational and financial position, with an
enhanced ability to compete well into the future. Our
recapitalization and dramatically reduced debt load will
allow us to do exactly that.”
As
part of its reorganization, the company intends to
rename itself Beechcraft Corporation and implement a
business plan that focuses on its turboprop, piston,
special mission and trainer/attack aircraft and on its
parts, maintenance, repairs and refurbishment
businesses, all of which are profitable and have high
growth potential.
Bill Boisture, Chairman of Hawker Beechcraft Corp.,
said, “Thanks to the hard work of our employees and the
strong support we have received from our key creditors,
union partners, elected officials, suppliers and
customers, Beechcraft Corporation will emerge from this
process as the world’s leading designer and manufacturer
of turboprop, piston and trainer/attack aircraft with
the largest global customer support network in the
industry.”
Ownership Structure and Corporate Governance - Hawker
Beechcraft expects the Plan to become effective by the
end of February, once all of the conditions for
effectiveness have been met. Upon emergence,
pre-petition secured bank debt, unsecured bond debt, and
certain general unsecured claims will be canceled and
holders of such claims will receive equity in the
reorganized company in the percentages negotiated by the
major creditor groups at the time the company commenced
its Chapter 11 proceedings.
Effective upon emergence, the company’s new Board of
Directors will include: General Donald G. ‘Don’ Cook,
Gene Davis, Ralph Heath, David Tolley, Gideon Argov,
Robert (Bob) Johnson and Bill Boisture. The company
expects to name two additional directors prior to the
effective date of the Plan. In addition, Bill Boisture
will become Chief Executive Officer of Beechcraft
Corporation and Steve Miller will become senior advisor
to the board. The company’s existing leadership team
will remain in place, providing continuity and valuable
insight into running the business.
Exit Financing - On Jan. 30, the Court approved the
company’s motion to retain J.P. Morgan Securities LLC
and Credit Suisse Securities (USA) LLC to act as joint
lead arrangers and joint bookrunners to structure,
arrange and syndicate $600 million in exit financing,
consisting of a term loan and a revolving line of
credit. The affiliated banks of the joint lead
arrangers, JPMorgan Chase Bank, N.A. and Credit Suisse
AG, have committed to underwrite the financing. The
financing will be used to repay all claims under the
debtor-in-possession post-petition credit facility, pay
certain settlement and cure payments and fund ongoing
operations.
Pension Plans - On Jan. 31, the Court approved the
company’s agreement with the Pension Benefit
Guaranty Corporation (PBGC) and the International
Association of Machinists to address its pension
plans within the context of its restructuring
efforts. According to the terms of the agreement,
accrued retirement benefits for participants in the
company’s hourly/union plan will remain the
responsibility of Hawker Beechcraft, while the PBGC
will assume responsibility for the company’s base
and salaried plans. Under the terms of this
approach, the company estimates that 100 percent of
union plan participants and more than 99 percent of
non-union plan participants will receive the full
amount of normal retirement pension benefits that
have already vested. The company has reached a
separate agreement to compensate those salaried
employees and retirees whose pension benefits would
otherwise have been reduced.
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