- By Region
Hawker Beechcraft is likely to cease production of business jets with the loss of thousands of jobs if it fails to conclude a deal to sell itself to a Chinese aircraft maker, the troubled small-aircraft maker warned in a court filing.
The filing reflects the arguments Hawker is likely to make about the merits of any deal with Superior Aviation Beijing as it seeks approval from the Committee on Foreign Investments in the United States.
Hawker has already undertaken to split off its defence business, which makes trainers and attack aircraft, from the business it hopes to sell to Superior, which is privately controlled but 40 per cent owned by a company linked to Beijng’s city government.
However, past attempted sales of sensitive US assets to foreign companies – including China National Offshore Oil Corporation’s
$20bn bid in 2005 for California’s Unocal – have stirred up significant political controversies that have led to the transactions’ failing.
Hawker, which was owned by Goldman Sachs and Onex, the private equity firm, sought Chapter 11 bankruptcy protection in May amid a slump in demand for its core private business aircraft. Tuesday’s filing makes it clear that only a deal with Superior – which hopes to market Hawker’s business jets in China – is likely to save jet production.
“The debtors believe that the Superior proposal, if consummated, could preserve thousands of American jobs, which otherwise would have been lost as a result of global economic conditions and industry weakness if the debtors shut down production of their jet product lines,” Hawker said in the filing.
It goes on to say a shutdown of the jet product lines is the likely outcome if the company restructures itself on its own. Hawker does not declare its jet business results separately from its other civilian aircraft businesses.
Superior and Hawker have signed an agreement binding them to negotiate exclusively with each other for up to 45 days. According to the filing, Superior’s proposal emerged as the “most attractive and most viable” after a marketing exercise among other potential bidders. Superior would pay at least $1.79bn for the parts of Hawker it bought in any eventual deal. Superior is providing Hawker with $50m funding during negotiations so that it can keep the jet production lines operating.
A successful deal would mark the second time that Superior has rescued an ailing US aerospace business. In 2010, it purchased Superior Air Parts, a Texas-based manufacturer of engines and engine components that had filed for Chapter 11 bankruptcy protection two years earlier. The Chinese company said that this integration had gone well.