Bankrupt Hawker Beechcraft Accepts $1.79 billion buyout offer from Chinese firm

Beechcraft employees in Wichita, Kan., work on a Hawker 4000 jet.

Hawker Beechcraft, the business-jet maker owned by Goldman Sachs and Onex, agreed to sell itself to Superior Aviation Beijing for $1.79 billion.

Under the terms of the agreement, Superior will make payments over the next six weeks to support operations, which will help keep bankrupt Hawker in business until the deal closes, according to a statement Monday from the companies. The sale doesn’t include the defense business.

Hawker Beechcraft and its competitors, especially builders of the smallest general-aviation planes, have struggled since 2008 as the recession eroded demand for private jets. The planemaker’s debt included a term loan and notes used for the portion of its 2007 takeover price of $3.3 billion not covered by $1 billion cash from buyers Goldman Sachs and Onex.

“Superior has had a long-standing interest in the commercial aircraft business of Hawker Beechcraft, having first approached the company several years ago regarding a potential strategic partnership,” said Chief Executive Officer Steve Miller. “This combination would give Hawker Beechcraft 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 to 15 years.”

Hawker retained Perella Weinberg Partners as a financial adviser in December and hired Miller, a turnaround specialist, in February. Before its May 3 bankruptcy filing, the company and Perella Weinberg identified 35 potential buyers from strategic purchasers to private-equity firms, according to a court filing.

Hawker sought court protection after net losses totaling more than $900 million in two years due to shrinking plane sales and declining U.S. military contracts. The Wichita, Kansas-based planemaker received eight bids from mid-May through mid-June, according to the filing.

A reorganization plan that Hawker filed June 30 would give control of the company to secured creditors holding debt valued at $921.6 million, canceling other interests in the company. New York-based Goldman Sachs and Toronto-based Onex each owned 49 percent of Hawker Beechcraft stock, while former managers and directors held the remainder.

The company said it would borrow an unspecified amount to exit court protection and repay a $400 million loan that financed operations while in bankruptcy. If Hawker Beechcraft and Superior reach a final agreement, the deal would remain subject to a competitive auction process and U.S. Bankruptcy Court approval.

Hawker’s aircraft include the Hawker 4000 business jet and the Beechcraft King Air propjet. The company competes with planemakers including Cessna Aircraft, Embraer, Gulfstream Aerospace and Bombardier.

Hawker traces its history partly to Walter and Olive Beech, who started Beech Aircraft during the Great Depression in 1932, according to the company’s website. With designer Ted Wells, they built the Beech Model 17, a biplane for business executives that sold for about $15,000, according to the U.S. Centennial of Flight Commission.

Siddharth Philip and Tiffany Kary contributed to this report.