Company Must Make Technical Modifications To The Plan Before It Can Be Finalized

Following its appearance in the U.S. Bankruptcy Court Thursday for the Southern District of New York, Hawker Beechcraft said in a statement that Judge Stuart M. Bernstein said he would approve the Joint Plan of Reorganization (Plan) for all but one of its subsidiaries currently under Chapter 11 protection. Judge Bernstein reserved judgment regarding the subsidiary, Hawker Beechcraft Corporation, and asked the company to make a technical modification to the Plan before he issues a final order.

The Court approved the company’s agreement with the Pension Benefit Guaranty Corporation (PBGC) and the International Association of Machinists to address its pension plans within the context of its restructuring efforts. According to the terms of the agreement, accrued retirement benefits for participants in the company’s hourly/union plan will remain the responsibility of Hawker Beechcraft, while the PBGC will assume responsibility for the company’s base and salaried plans. Under the terms of this approach, the company estimates that 100 percent of union plan participants and more than 99 percent of non-union plan participants will receive the full amount of normal retirement pension benefits that have already vested. The company has reached a separate agreement to compensate those salaried employees and retirees whose pension benefits would otherwise have been reduced.

In addition, on Jan. 30, the Court approved the company’s motion to retain J.P. Morgan Securities LLC and Credit Suisse Securities (USA) LLC to act as joint lead arrangers and joint bookrunners to structure, arrange and syndicate $600 million in exit financing, consisting of a term loan and a revolving line of credit. The affiliated banks of the joint lead arrangers, JPMorgan Chase Bank, N.A. and Credit Suisse AG, have committed to underwrite the financing.

The financing will be used to repay all claims under the debtor-in-possession post-petition credit facility, pay certain settlement and cure payments and fund ongoing operations.

Separately, the company has announced that effective upon its emergence from this process, the company’s new Board of Directors will include: General Donald G. ‘Don’ Cook, Gene Davis,Ralph Heath, David Tolley, Gideon Argov, Robert (Bob) Johnson and Bill Boisture. The company expects to name two additional directors prior to the effective date of the Plan. In addition, Bill Boisture will become Chief Executive Officer of Beechcraft Corporation and Steve Miller will become senior advisor to the board. The company’s existing leadership team will remain in place, providing continuity and valuable insight into running the business.

FMI: www.hawkerbeechcraft.com