tuesday, 10 july of 2012

Embraer interested in Goldman´s Hawker assets


Embraer interested in Goldman's Hawker assets

Hawker Beechcraft Inc., the bankrupt business-jet maker owned by Goldman Sachs Group Inc. and Onex Corp., may draw higher bids after agreeing to sell itself to Superior Aviation Beijing Co. for $1.79 billion.

Superior will make payments over the next six weeks to help keep Hawker afloat until the deal closes, the companies said yesterday. The accord makes Superior the so-called stalking horse bidder in a U.S. Bankruptcy Court-supervised auction that may win more offers. Textron Inc. and Embraer SA expressed interest previously in Hawker's assets.

Hawker Beechcraft sought bankruptcy protection in May after the company and other private-jet manufacturers struggled with lower demand following the recession. The planemaker's debt included a term loan and notes used for the portion of its $3.3 billion takeover in 2007 that wasn't covered by $1 billion cash from buyers Goldman Sachs and Onex.

Merging with Superior would provide more "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," Chief Executive Officer Steve Miller said yesterday.

Hawker retained Perella Weinberg Partners LP as a financial adviser in December and hired Miller, a turnaround specialist, in February. Net losses totaling more than $900 million in two years due to shrinking plane sales and declining U.S. military contracts prompted Hawker's bankruptcy.

Eight bids

Before its filing, the company and Perella Weinberg identified 35 potential buyers from strategic purchasers to private-equity firms, according to a court document. The company received eight bids from mid-May through mid-June, according to the filing.

A sale to Superior Aviation would be a threat to Textron's Cessna, Julian Mitchell, an analyst with Credit Suisse in New York, wrote in a note yesterday. A company controlled by the Beijing municipal government owns 40 percent of Superior, which would "substantially reduce" Cessna's chances in China, he said.

"The Chinese have made substantial inroads into global market shares in other transportation industries such as shipbuilding and railway rolling stock, and we do not see why business jets are particularly impervious," Mitchell wrote. Even with Hawker Beechcraft struggling, Cessna’s pricing had been "soft," he said.

'Most attractive'

Bill Boisture, chairman of Hawker Beechcraft, said the decision to move forward with the Chinese bidder was "based on two key factors: the bid for the company was the most attractive we received during the strategic review process and the going- forward plan offered the most continuity for our business."

Boisture said Superior is committed to maintaining Hawker Beechcraft's strong presence in the U.S. as well as its employee base and management team.

Superior plans to fund the acquisition with its own capital and loans from Chinese banks, Qian Chunyuan, its spokesman, said in a telephone interview today. The Beijing-based company is confident it can conclude the deal, he said.

The Chinese company acquired Superior Air Parts Inc. in 2010 after the Texas-based engine maker filed for bankruptcy protection, Qian said. The U.S. manufacturer is now profitable, according to Qian.

Superior Aviation is 60 percent owned by Chairman Cheng Shenzong, he said. Cheng's other holdings include Qingdao Haili Helicopter Co. and Qingdao Brantly Investment Group.

Textron interest

Hawker's aircraft include the Hawker 4000 business jet and the Beechcraft King Air propjet. The company competes with planemakers including Textron’s Cessna Aircraft Co., Embraer, Gulfstream Aerospace Corp. and Bombardier Inc.

Textron is interested in buying Hawker for its propeller- driven business planes and military training aircraft, Chief Executive Scott Donnelly said in an interview yesterday at the Farnborough air show near London before Superior's announcement. The Superior Aviation deal doesn't include Hawker's defense business.

Donnelly said Providence, Rhode Island-based Textron sees the most value in the Beechcraft King Air planes and the T-6, known as the trainer because the military uses the planes as a training aircraft. The Hawker 4000 and 900, which are jet planes that carry about 10 passengers, are struggling against the competition, he said.

Mahindra & Mahindra

"There are problematic parts and there are good parts. For the right number, you could manage that and we could make it a win for our shareholders," Donnelly said. "But there's no reason for a company like ours to overpay for that asset."

Mahindra & Mahindra Ltd., India's biggest maker of utility vehicles, also was considering bidding for the planemaker, a person with knowledge of the matter said July 5. Mahindra builds turboprop aircraft, as does Hawker.

Embraer SA Chief Executive Officer Frederico Curado said on an April 27 conference call that he would be taking "a serious look" at how Hawker Beechcraft's assets might give a boost to the Brazilian planemaker's business-jet division. Robert Stangarone, an Embraer spokesman, declined to comment yesterday.

Hawker traces its history partly to Walter and Olive Beech, who started Beech Aircraft Corp. during the Great Depression in 1932, according to the company's website. With designer Ted Wells, they built the Beech Model 17, a biplane for business executives that sold for about $15,000, according to the U.S. Centennial of Flight Commission.

Reorganization plan

Prior to the Superior Aviation offer, Hawker had filed a proposed reorganization plan that would give control of the company to secured creditors holding debt valued at $921.6 million, canceling other interests in the company. New York- based Goldman Sachs and Toronto-based Onex each owned 49 percent of Hawker Beechcraft stock, while former managers and directors held the remainder.

The company said it would borrow an unspecified amount to exit court protection and repay a $400 million loan that financed operations while in bankruptcy.

(Published by Bloomberg - July 10, 2012)

latest top stories

subscribe |  contact us |  sponsors |  migalhas in portuguese |  migalhas latinoamérica