Reuters: Bankruptcy News: UPDATE 3-Hawker Beechcraft in talks with Chinese company for $1.8 bln sale

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UPDATE 3-Hawker Beechcraft in talks with Chinese company for $1.8 bln sale Jul 10th 2012, 02:17 Mon Jul 9, 2012 10:17pm EDT * Co in exclusive talks with Superior Aviation Beijing Co * Defence unit would not be sold to the Chinese company * Any finalised deal still subject to auction process July 10 (Reuters) - Bankrupt aircraft maker Hawker Beechcraft Inc said it was in exclusive talks with a Chinese aerospace firm over a sale of the company for $1.79 billion, an offer that may flush out higher bids from other parties. Chinese companies have announced a flurry of international takeovers this year, part of a decade-old "going out" policy that encourages companies to acquire natural resources and technological know-how abroad. If finalised, Superior Aviation Beijing Co's offer for the U.S. business jet maker will be subject to an auction process and face legal and regulatory reviews in both the United States and China. The Chinese maker of plane engines and parts has offered to fund Hawker Beechcraft's jet operations over the next six weeks. Other aircraft makers such as Brazil's Embraer or Textron could also bid for Hawker Beechcraft when the auction process starts, industry bankers said. Superior, which is 40 percent owned by a company controlled by the Beijing municipal government, will not buy Hawker Beechcraft's defence business, an exclusion that might make it easier for a deal to clear U.S. regulatory hurdles. "Superior has had a long-standing interest in the commercial aircraft business of Hawker Beechcraft, having first approached the company several years ago regarding a potential strategic partnership," Hawker Beechcraft said in a statement on Monday. Hawker Beechcraft, owned by Goldman Sachs Group Inc's private equity arm and Onex Corp, filed for Chapter 11 bankruptcy in May, unable to support a $2.5 billion debt load amid a weak business jet market. The Wichita, Kansas-based maker of business jets, general aviation turboprops and military aircraft had filed a reorganisation plan that will give secured lenders at least 81 percent of the company's equity when it emerges from bankruptcy. A deal with Superior would be subject to approvals from the Chinese government, the U.S. bankruptcy court and the Committee on Foreign Investment in the United States, known as CFIUS. CFIUS, which includes top officials from the U.S. Treasury, Commerce, Justice, State and Defense departments, has authority to review potential national security risks in deals that could result in foreign control of a U.S. business. Hawker Beechcraft, whose exclusivity period with Superior runs for 45 days, said in a statement on its website the defence business would remain a separate entity. The defence unit manufactures military training, surveillance and light-attack aircraft. Including the defence unit in a sale to a Chinese company, especially one that is partly state-owned, would have attracted CFIUS's attention, so a U.S.-based buyer is more likely. Bankers said U.S. defence industry players or private equity firms could be interested in the defence business. British defence contractor BAE Systems has also been touted as a potential buyer. If the defence business is sold to another company, up to $400 million of the $1.79 billion purchase price would be refunded to Superior. Link this Share this Digg this Email Reprints

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