WICHITA, Kan. (AP) — Aircraft maker Hawker Beechcraft filed for bankruptcy protection Thursday after reaching agreement with the majority of its secured lenders and bondholders on a plan to restructure its massive debt.
Hawker Beechcraft, which is based in Wichita, Kan., said in a statement that it filed a voluntary petition for Chapter 11 bankruptcy protection in federal bankruptcy court in New York in order to expedite the prearranged restructuring of the company and some of its subsidiaries
Under the terms of its restructuring plan, about $2.5 billion in debt and almost $125 million in annual cash interest expenses would be eliminated. The company also said it had obtained a commitment for $400 million in financing that will enable it to continue paying employees, venders and others. It said all orders will be fulfilled and service to customers will be uninterrupted.
The company employs some 7,400 people, with roughly 4,700 working at its Wichita facility. It also has factories in Little Rock, Ark., Britain and Mexico, as well as more than 100 service centers worldwide.
Hawker Beechcraft Corp., which is owned by GS Capital Partners and Onex Partners, has struggled with tepid demand for its military planes and business jets over the past few years.
“We are pleased to have reached an agreement with our largest lenders and bondholders on a solution to stabilize and improve our capital structure,” Robert Miller, CEO of Hawker Beechcraft, Inc., said in a statement. “In the last three years, the company has made aggressive transformational changes in all operational functions, and today’s announcement represents the next step forward.”
The company said restructuring its balance sheet and recapitalizing the company in partnership with our debt holders will dramatically improve its ability to compete in a rapidly changing environment.
The company said more than two-thirds of its bank and bond holders are parties to the agreement.
Since its founding and highly-leveraged 2007 purchase of Raytheon’s former aircraft unit, Raytheon Aircraft, Hawker Beechcraft has carried a heavy debt burden, reporting a total debt of $2.3 billion at the end of 2011, according to its annual statement to the Securities and Exchange Commission.
In its annual statement, which was filed with the SEC on April 13, Hawker Beechcraft reported operating losses of $481.8 million in 2011 and a net loss of $632.8 million, when factoring in $135.6 million in interest expenses and other costs.
Some 350 employees were handed 60-day layoff notices last month in the latest round of work force reductions.
The company insisted at the time that the layoffs wouldn’t affect its agreement with state and local officials to keep its aircraft operations and at least 4,000 jobs in Kansas until 2020 in exchange for $45 million in incentives.
Hawker Beechcraft can trace its Kansas roots to Beech Aircraft Corp., a company founded by Walter and Olive Ann Beech that began making aircraft in the 1930s.