Hawker Beechcraft has reached a settlement with the Pension Benefit Guaranty Corp., allowing for termination of two pension plans and removing the Wichita-based planemaker’s largest impediment to approval of its bankruptcy reorganization.Hawker Beechcraft filed papers in U.S. Bankruptcy Court for the Southern District of New York on Dec. 21 to approve a settlement with the PBGC, allowing termination of the pension plans for salaried workers and non-union workers in the customer-support arm of the business.
The pension plan for hourly workers will be frozen at the year’s end.
For its part of the settlement, the PBGC will receive $11 million in cash for the release of liens plus an unsecured claim for $419.5 million to be paid with new stock.
The secured lenders will have a so-called call option where they can purchase the stock from the PBGC within three years under a pre-determined formula.
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The settlement with the PBGC is accompanied by an agreement with the International Association of Machinists and Aerospace Workers. Both agreements will come up for approval at a hearing on Jan. 17 in bankruptcy court in Manhattan.
The terminated pension plans will be replaced by a new defined-contribution plan. The settlements are supported by secured lenders and by a majority of unsecured noteholders, according to a court filing.
Hawker Beechcraft is expected to seek approval from the court to emerge from bankruptcy at a Jan. 31 confirmation hearing.