Hawker Beechcraft, Inc. announced yesterday that it has executed an exclusivity agreement with Superior Aviation Beijing Co., Ltd, a Chinese aerospace manufacturer, that will result in Superior taking ownership of the US aircraft manufacturer.
Under the terms of the agreement, which is still to be completed, Superior will buy Hawker Beechcraft (HB) for $US1.79 billion, whilst retaining the current plants at Wichita, Kansas and Little Rock, Arkansas. Payments will be made over the next six weeks to support ongoing jet operations.
Under the proposal, Superior will make HB its flagship investment, maintain the current management team and employees and continue product development of commercial products.
The agreement is part of Hawker’s ongoing review of strategic options. HB decided to proceed with Superior after considering the proposal would create the greatest value for the company and position it for long-term growth.
Robert S. Miller, CEO of HBC revealed in a statement that the link to Superior was nothing new.
“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,” he said. “With Superior’s previous experience operating a US business and its demonstrated ability to quickly restore a business to profitability after emerging from Chapter 11, we believe a transaction with Superior would maximize value for Hawker Beechcraft and its stakeholders.
“Importantly, 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 10-15 years. We look forward to working toward a definitive agreement.”
Bill Boisture, Chairman of Hawker Beechcraft Corporation, outlined the reasons for going with the Chinese firm.
“The decision to move forward with Superior was based on two key factors: the bid for the company was the most attractive we received during the strategic review process and the going-forward plan offered the most continuity for our business, allowing us to preserve jobs, product lines and our ability to maintain our commitments to our customers.
“Superior is committed to maintaining Hawker Beechcraft’s strong presence in the United States and retaining its current employee base and experienced management team, while positioning the company for future growth at home and abroad.”
The two companies will continue working on the deal through 45-day exclusivity period as Superior does the necessary due diligence. Should the deal not be finalized, HB has said it will proceed with seeking confirmation of the Joint Plan of Reorganisation filed with the US Bankruptcy Court on June 30, which contemplates HB emerging as a standalone entity with a more focused portfolio of aircraft.
The exclusivity agreement with Superior does not include Hawker Beechcraft Defense Company (HBDC), which produces among others the T-6 Texan trainer and AT-6 attack aircraft. This leaves HB free to sell HBDC to a third party. Should this happen, Superior will be refunded $US 400 million.
Superior Aviation Beijing Co., Ltd. is an aerospace manufacturer that engages in research and development; production and sale of general aviation engines and parts. Superior is 60% owned by Beijing Superior Aviation Technology Corporation Ltd., a closely-held private entity, and 40% owned by Beijing E-Town International Investment & Development Corporation Ltd., a company controlled by the Beijing municipal government that supports the financing of strategic investments in certain industries.