Hawker Beechcraft Inc., the bankrupt business-jet maker, shouldn’t be sold to a buyer owned by the Chinese government because the deal would endanger jobs and national security, a U.S. judge was told by a labor union.
Hawker Beechcraft, now owned by Goldman Sachs Group Inc. (GS) and Onex Corp. (OCX), last week asked U.S. Bankruptcy Judge Stuart M. Bernstein in Manhattan to let it negotiate exclusively with Superior Aviation Beijing Co. for as long as 45 days.
While Hawker Beechcraft suggested the Superior proposal “‘could preserve thousands of American jobs,’ there is nothing in the record to support such a belief,” the International Association of Machinists and Aerospace Workers said yesterday in a court filing.
The jet maker agreed to sell itself to Superior 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 July 9. The exclusivity period, for which Superior is willing to pay the debtor $50 million, could make it a so-called stalking-horse bidder in a court-supervised auction.
Hawker Beechcraft sought bankruptcy protection in May after struggling with reduced demand for private jets following the recession and constrained U.S. defense spending. The company’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.
While Hawker Beechcraft’s defense-related operations would be excluded from the sale, the machinists questioned why Superior would be entitled to a refund of as much as $400 million once those assets are sold and why the proposal includes a provision that the Chinese firm would have “ongoing relationships” with that business.
Citing required U.S. government approvals before the transaction could close, the machinists said, “It is critically important to fully assess the likelihood of whether those approvals can be obtained before the debtors lock themselves (and their stakeholders) into an exclusive negotiating period with Superior.”
“The agreement we have reached with Superior allows us to preserve jobs as the negotiation and restructuring process progresses,’” Justin Dini, an outside spokesman for the company, said in an e-mailed statement. “Our negotiating agreement with Superior has no impact on the timing of regulatory agencies’ reviews.”
Superior’s deal with Hawker would be a “good solution,” as long as the Chinese buyer invests adequate resources into the plane-maker and abides by the U.S. accounting rules to give other shareholders clarity about the funding, said Tom Donohue, chief executive officer of the U.S. Chamber of Commerce, a Washington-based industry group.
“If nobody goes in there and puts down the money, we’re going to lose all those jobs,” Donohue said in a Bloomberg TV interview in Beijing today. “If the Chinese go in there and put down the money, and make a commitment to keep a good proportion of those jobs at home, that’s a good deal.”
Dini, who is affiliated with Brunswick Group LLC in New York, said any transaction would still be subject to the court’s auction process as well as approval by the Committee on Foreign Investment in the U.S. and other regulators.
The case is In re Hawker Beechcraft Inc., 12-11873, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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