Textron’s SEC filing outlines plan to borrow for Beechcraft acquisition
01/24/2014 6:57 AM
08/08/2014 10:21 AM
In the weeks since Textron announced a deal to buy Beechcraft Corp., behind-the-scenes work has been ongoing.
An annual audit is under way and is expected to be completed by the end of February. The necessary paperwork has been filed for regulatory approval under anti-trust provisions.
And transition teams from Beechcraft and Cessna began working together last week, Beechcraft CEO Bill Boisture said.
Textron, which operates Cessna Aircraft in Wichita, plans to secure up to $1.1 billion in new debt in advance of closing the deal to buy Beechcraft, the company said.
In a filing with the Securities and Exchange Commission on Thursday, Textron said it plans to offer notes due in 2021 and 2024 in order to complete the deal. It did not list the amounts or interest rates in its SEC filing.
If Textron does not complete the acquisition or the agreement is terminated by the last day of 2014, the notes will be subject to a special mandatory redemption provision, and the net proceeds from the offering of the 2024 notes would be used for general corporate purposes, the filing said.
In the event the deal doesn’t close by the end of the year, the 2021 notes will be subject to special mandatory redemption at a price equal to 101 percent of the principal amount plus accrued and unpaid interest, the filing said.
On Dec. 26, Textron entered an agreement to acquire Beech Holdings, the parent company of Beechcraft Corp., for $1.4 billion in cash. When the deal was announced, company officials said they expected it to close by July 1.
The agreement contains termination provisions, the filing said, including the right of each company to terminate the agreement if regulatory approvals have not been secured and the deal has not been completed by July 24, according to the SEC filing.
In the meantime, transition teams are working to identify the best practices of each company in order for Textron to build a stronger presence in the market, Boisture said.
The structure of the company after the deal closes has not been defined, he said.
The teams are also looking at facilities and the workforce and how best to deploy assets, Boisture said.
“Undoubtedly there will be some changes,” he said.
The sale to Textron will bring good things to Beechcraft, Boisture said.
“It’s the first time in over a decade this company has had the support of a strong parent company that understands the aviation business,” he said.
Everyone remembers Beechcraft and Cessna as competitors, he said. But that changed when Beechcraft emerged from bankruptcy last year and exited business jet production.
The product lines of the two companies are complementary, he said.
Owners of Beechcraft products are extremely important to Cessna’s jet business, Boisture said. Those wanting to move up to a business jet will be able to transition into a Citation.
In the meantime, it’s business as usual at Beechcraft, Boisture said.
“We’re full steam ahead on the plan we had for ’14, ’15 and ’16,” he said.