Hawker Beechcraft could file for Chapter 11 bankruptcy as early as today, a Wall Street Journal article said Wednesday.
The company is in the final stages of preparing a “pre-arranged bankruptcy” and is expected to hand ownership over to several hedge funds, sources told the Wall Street Journal.
It’s negotiated a restructuring deal with lenders, and a filing could come as soon as today , depending on how quickly lawyers finish up documents, the paper reported.
The company has more than $2.3 billion in debt.
In a pre-arranged bankruptcy, creditors would agree to a deal ahead of time, which shortens the time it would take to restructure the company.
The creditors would convert more than $2 billion of its debt to equity in a restructured company, which would eliminate nearly all the debt on its balance sheet, the article said.
Hawker Beechcraft would continue to operate, and employees would continue to get paid, it said.
Centerbridge Partners, Angelo, Gordon & Co. Sankaty Advisors and Capital Research and Management own major portions of Hawker Beechcraft’s $1.8 billion in senior debt. They would forgive those obligations in exchange for the bulk of the company’s new equity, making them owners, sources told the Wall Street Journal.
During the proceedings, Hawker could explore other options, including the possible sale of its business lines, the article said.
In February, Hawker Beechcraft hired Steve Miller, a turnaround expert, as its CEO.
In March, the company received a $124.5 million loan to keep the company running and received a waiver on a variety of debt terms from its creditors. The loan comes due June 29.
The company recorded a net loss of more than $630 million last year and said in a filing with the Securities and Exchange Commission in April that it had doubts about its ability to continue as a going concern.
If it’s not able to make payments, refinance debt or obtain new financing, the company warned it may have to consider other options, the filing said.
Those options could include sales of assets, sales of equity, negotiations with its lenders or filing for Chapter 11 bankruptcy, it warned.
Last week, the company handed out 60-day layoff notices to 350 workers, most of them hourly employees.
Most recently, it filed with the SEC to de-register its bonds. That also means that the company will no longer be required to disclose its financial results with the SEC on a regular basis.
Hawker Beechcraft was formed in 2007 after Goldman Sachs and Onex Corp. bought the company, Raytheon Aircraft, from Raytheon for $3.3 billion.
Miller said in a news release April 13 that the company will make some important decisions in the coming weeks.
“(Its SEC) filing reflects the combined effect of the prolonged weakness in our market that has continued to affect our business and the heavy debt burden the company has operated under since 2007,” Miller said in the release, referring to an SEC financial filing that preceded the notice to de-register its bonds.
“Hawker Beechcraft continues to work closely with our lenders to restructure the company’s balance sheet, and to do so as quickly as possible,” Miller said. “In the coming weeks, we expect to decide on a path forward for Hawker Beechcraft that will include a plan that will put the company on firm financial footing and better position Hawker Beechcraft for the future. As we move forward with this process, we remain steadfast in our commitment to building, selling and servicing the best airplanes for our civilian and military customers.”