Hawker Beechcraft Corporation has issued a strong warning to stakeholders that the company may not be able to continue operations, saying "there is substantial doubt about our ability to continue as a going concern." The statement was made in the Form 10K Annual Report filed with the US Securities and Exchange Commission on April 13.
The statement went on to say: “The Company has suffered recurring operating losses resulting in a significant net shareholder’s deficit that raises substantial doubt about its ability to continue as a going concern. The Company is operating under a forbearance agreement with its lenders which defers interest payment obligations and provides relief from loan covenants through June 29, 2012.
“Due to the fact that we have recurring negative cash flows from operations and recurring losses from operations, we will need to seek additional financing. There is substantial doubt that we will be able to obtain additional equity or debt financing on favorable terms, or at all, in order to have sufficient liquidity to meet our cash requirements for the next twelve months.
HBC has a current debt of US$2 billion, and has issued letters of credit totaling US$51 million. In addition, another US$125 million was borrowed on March 27 to fund ongoing operations. The level of debt is expected to severely affect company operations, the level of interest on loans soaking up cash that is desperately needed to fund operations.
The manufacturer, which has just celebrated its 80th anniversary, has few options to rescue itself from the financial mire, and has listed seeking Chapter 11 Bankruptcy protection as one of them. Under Chapter 11, a US company can continue trading whilst technically bankrupt. HBC could also choose to sell assets and equity to raise money, or attempt to further restructure debt.
Although sales for the 2011 calendar year topped US$2.4 billion, HBC still booked an operating loss of US$481 million and a total debt of US$2.3 billion.
Hawker Beechcraft, manufacturer of the iconic Bonanza, is in financial strife by its own admission.
