Hawker Beechcraft hires turnaround specialist as CEO
02/28/2012 11:05 AM
08/08/2014 10:08 AM
Steve Miller, who calls himself “The Turnaround Kid,” has spent his long career rescuing troubled companies.
A restructuring specialist, Miller, 70, now will work with Wichita’s financially troubled Hawker Beechcraft in an attempt to help it emerge from the bumpy journey it has been on since the 2008 downturn in the business aviation market.
The company’s board of directors appointed Miller CEO of Hawker Beechcraft Inc., effective Tuesday, replacing Bill Boisture. Boisture, however, will continue in his role as chairman of its subsidiary, Hawker Beechcraft Corp.
Hawker Beechcraft has been working to avoid breaching financial covenants on its debt with lenders. It has been close to violating those loan terms during a protracted downturn in the general aviation market. Last December, the company hired financial advisor Perella Weinberg Partners.
“My assignment is to figure out how to get through these financial headwinds,” Miller said.
Miller and Boisture will work side-by-side in a shared office at the company’s headquarters on East Central. Miller will work on the financial side of the company, while Boisture will focus on designing, building and selling airplanes, Miller said Tuesday.
“It’s got some tough challenges here, but there’s a lot of strength here,” Miller said of the company. “There’s every reason to believe we will get through the challenges.
“The one fundamental thing here is that we need to be able to finance our way through this recession in the marketplace. I have every confidence the creditors will give us the runway to keep going.”
Miller said it’s too soon to say what specific actions he may take.
“I arrived here at midnight last night (Monday),” he said. “I didn’t come here with an agenda or with a magic silver bullet. This is going to take hard work by all the people at Hawker Beechcraft, the support of our suppliers” and confidence of customers.
“I’m going to spend a lot of time making sure that the confidence of all our constituents is maintained and enhanced,” Miller said.
Miller will remain chairman of American International Group, which he joined in 2009 after the government’s bailout of the insurer. He’s also a director of Symantec, a software company.
Miller helped Chrysler Corp. return to profitability, oversaw the bankruptcy of auto-parts supplier Delphi Corp., and was CEO of Waste Management Inc., Federal-Mogul Corp. and Bethlehem Steel Corp.
“From a financial perspective, there’s certainly none better,” said Mike Wall, an auto analyst with IHS Automotive in Grand Rapids, Mich.
“What Steve brings to the mix is an intense focus on operation. He’s very operationally minded, very financially minded. He’s able to wring costs out of the equation. That core focus and leadership will certainly serve the company well. He definitely has a background.”
Miller will have to learn to understand the company and its business, said Clark Troy, a senior analyst with research firm Aite Group in Chapel Hill, N.C.
“You’ve got a skilled guy coming in who’s used to working with troubled companies who’s going to look at the tools he has to make the best decision for the company,” Troy said. “Clearly, he’s an experienced guy working in these situations.”
‘Part of the community’
Miller grew up in Portland and Bandon, Ore. In the summers, he worked in the area’s sawmills.
He earned bachelor’s and master’s degrees from Stanford University and a law degree from Harvard.
His wife of 40 years died in 2006 of brain cancer. He married his current wife, Jill, in 2007. Miller has three sons, and his wife has two children.
In 2008, Miller wrote an autobiography called “The Turnaround Kid,” which chronicled a career that began with Ford Motor Co. in 1968.
Miller’s wife will arrive in Wichita next week, and they will begin searching for a home, he said.
“We want to be part of the community,” Miller said.
On his first day on the job Tuesday, Miller contacted lenders, the union, suppliers and others to alert them to the change. He spoke with Wichita Mayor Carl Brewer, telling him of his appreciation of the city’s support of the company.
Hawker Beechcraft will live up to agreements it made with the city, county and state, Miller said.
“We don’t see any reason we can’t live up to those agreements,” he said.
Miller also put in a call to Gov. Sam Brownback’s office. In late 2010, the state of Kansas agreed to provide a $40 million package to the company. The city and county also agreed to provide $2.5 million over five years. In return, Hawker Beechcraft agreed to stay in Wichita for 10 years and employ 4,000 people.
Christopher DeNicolo, a credit analyst with Standard & Poor’s in New York, told Bloomberg News on Tuesday that it’s not surprising that Hawker Beechcraft would bring in outside people to help address its debt situation.
Lenders have been watching the company’s agreements not to exceed a set amount of debt burden. Hawker Beechcraft must work with lenders to loosen those covenants so it can have more flexibility to operate and succeed, one industry expert said.
If it breaks its covenants, lenders can take action. A $1.4 billion debt that matures in March 2014 would increase the chances of a distressed debt exchange or a restructuring, DeNicolo told Bloomberg.
Miller said he’s not expecting a need to file for restructuring, although “it’s an obvious question when somebody like me joins the team,” he said.
His charge is to get through the financial troubles “without even having to think about a Chapter 11 filing,” Miller said. “That’s my assignment to myself and the assignment the board had given me, (to) go figure this out.”
The company was founded as Beech Aircraft Corp. in 1932 by Walter H. and Olive Ann Beech. Onex Corp. and Goldman Sachs Capital Partners bought the company in 2007 for $3.3 billion from Raytheon.
“This is a great company. It’s an important part of the global aviation marketplace,” Miller said. “This is going to be a wonderful story. (We’re going to) emerge on the other side as a company our whole country can be proud of.”