While the preliminary reorganization plan filed June 30 details an exchange under which ’s creditors would take ownership of the company, Hawker executives yesterday told employees they are keeping all options open, including a potential sale of the company.
The reorganization plan and an accompanying disclosure statement was the next step designed to help the company move out from under nearly $2.5 billion in debt and emerge from Chapter 11 bankruptcy protection.
The company filed a prearranged Chapter 11 restructuring proceeding May 3. Under the timeline outlined by the company, the disclosure statement must receive approval by Aug. 31, followed by confirmation of the reorganization plan by Nov. 15. The plan would take effect on Dec. 15.
The plan outlines the basic structure for how the company will transfer ownership to the creditors, with a new board of directors. The current leadership team, however, would be able to remain intact.
The company later wants to supplement that plan with a detailed “going-forward” business plan. Hawker Beechcraft in April already outlined a number of options for a new business plan that included shedding some existing product lines, such as the Premier aircraft. But for now, the company says no decisions have been made.
In yesterday’s letter, Hawker Beechcraft Inc. CEO Steve Miller and Hawker Beechcraft Corp. Chairman Bill Boisture add that “in order to develop a plan that best positions Hawker Beechcraft for the future, we continue to thoroughly evaluate all strategic options available to us. Those options include continuing to operate as a standalone entity and evaluating a potential sale of the company.”
The company was believed to have been taking bids for its sale, but is not providing details on those bids nor disclosing them in the public record. The leaders of several business jet manufacturers have expressed an interest in at least parts of the company. Particularly attractive to them is the Hawker Beechcraft support network.
Hawker Beechcraft executives say they are making “meaningful progress” on their evaluation of the plans and will provide updates as soon as possible. “Since the restructuring process began, we have been guided by a single goal: to emerge from Chapter 11 in the strongest possible operational and financial position while preserving as many jobs as possible,” they add.
But the company continues to lose money, and a court filing last week indicated that it lost another $90 million in May alone. The bulk of that loss, however, comes either from interest expenses or reorganization costs.
The company on June 29 issued 60-day Worker Adjustment and Retraining Notification (WARN) letters to about 125 employees in several areas of the company. “This is an ongoing evaluation and will initiate reductions in force and implement furloughs as we see appropriate,” Miller and Boisture told employees.
Acknowledging the distraction and interruption of the WARN announcements, executives note that they were continuing to “focus on operating the business in the normal course and being good stewards of our cash by balancing our production rate with the challenging and rapidly changing environment we continue to face.”