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Friday, July 11, 2014

Chinese company plans to buy Hawker Beechcraft

By Molly McMillin
The Wichita Eagle

Hawker Beechcraft has reached an exclusive agreement with Superior Aviation Beijing Co. in which the Chinese company will acquire Hawker Beechcraft for $1.79 billion and make payments over the next six weeks to support on-going jet-related operations.

The funds will help the company sustain the jet business until the close of the transaction, Hawker Beechcraft said today.

Superior intends to maintain Hawker Beechcraft’s U.S. headquarters, management team and employees and continue product development throughout its commercial lines, according to a statement from Hawker Beechcraft..

Superior also plans to maintain its existing operations while investing substantial capital in the company and its business and general aviation line, the company said, “saving thousands of American jobs.”

During the 45-day exclusivity period, Superior will perform due diligence while the two companies negotiate the definitive documentation of the transaction.

Hawker Beechcraft’s defense business is not part of the proposed transaction. Neither ownership nor control of the defense business will transfer to Superior.

If the defense piece is sold, up to $400 million of the purchase price will be refundable to Superior, the company said.

If there is no deal at the end of the 45 days, Hawker Beechcraft will proceed with its Chapter 11 bankruptcy, which contemplates Hawker Beechcraft emerging as a standalone entity with a more focused portfolio of aircraft.

Hawker Beechcraft entered into the agreement with Superior as part of its ongoing review of strategic options, including continuing to operate as a stand-alone company.

The company decided to proceed with Superior after determining that its proposal would create the greatest value for the company and position it for long-term growth.

“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,” Steve Miller, Hawker Beechcraft CEO, said in a statement.

Superior has had previous experience operating a U.S. business and it’s demonstrated the ability to quickly restore a business to profitability after emerging from Chapter 11, Miller said.

“We believe a transaction with Superior would maximize value for Hawker Beechcraft and its stakeholders,” Miller said. “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 to 15 years.”

The decision to move forward with Superior’s offer was based on two key factors, said Bill Boisture, chairman of Hawker Beechcraft Corp.

For one, the bid was the most attractive Hawker Beechcraft received during the strategic review process, Boisture said.

In addition, its plan going forward offered the most continuity for the business, allowing it to preserve jobs, product lines and the ability to maintain commitments to customers, Boisture said.

Superior’s proposal reflects its intention to make Hawker Beechcraft its flagship investment, the company said.

Superior has received and expects to continue to receive the full support of the City of Beijing municipal government in completing the transaction.

The Chinese company is working to obtain all regulatory approvals from the Chinese central government for this foreign investment project.

The sale is also subject to approval by the U.S. Committee on Foreign Investment in the United States, as well as additional customary U.S. regulatory reviews and approvals.

The bankruptcy court must also approve Hawker Beechcraft’s agreement to negotiate exclusively with Superior and for any agreement that may be negotiated.

Hawker Beechcraft filed for Chapter 11 bankruptcy on May 3.

Superior Aviation Beijing Co. is an aerospace manufacturer that engages in research and development, production and the sale of general aviation engines and parts.

It is 60 percent owned by Beijing Superior Aviation Technology Corp., a closely held private company, and 40 percent owned by Beijing E-Town International Investment & Development Corp., a company that’s controlled by the Beijing municipal government.

Contact Molly McMillin at 316-269-6708 or mmcmillin@wichitaeagle.com

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