Debt-laden aircraft maker Hawker Beechcraft Inc HKBCH.UL said it will go it alone after plans to sell itself to a Chinese firm fell through, but will get out of the corporate jet business.
The Wichita, Kansas-based company, owned by Goldman Sachs Group Inc (GS.N) and Onex Corp OCX.TO, filed for bankruptcy protection in May, unable to support a $2.5 billion debt load.
Hawker, which makes general aviation turboprops and military aircraft as well as business jets, said in July that it was in exclusive talks with the China's Superior Aviation Beijing Co over the sale of the company for $1.79 billion.
It said on Thursday it could not agree on terms with Superior, a 60-40 joint venture between privately owned Beijing Superior Aviation Technology Co and government-backed Beijing E-Tong International Investment & Development Co.
"We are disappointed that the transaction did not come to fruition, but we protected ourselves by obtaining a $50 million deposit from Superior that is now fully non-refundable and property of the company," Hawker CEO Robert Miller said.
Hawker said it now intended to emerge from bankruptcy in the first quarter of 2013 as a standalone company focusing on turboprop, piston, special mission and trainer/attack aircraft.
The company said it was evaluating strategic options with creditors for its Hawker product line, which includes the struggling business jet division and that the business would be closed if there are no satisfactory bids.
Under the proposed deal with Superior, Hawker's politically sensitive defense business would have remained a separate entity that analysts said would probably be sold to a U.S. buyer.
Prospects for the jet business look grim, analysts said.
"I don't see any of the established players like Bombardier (BBDb.TO) taking an interest in the segment," said Neal Dihora, an analyst at Morningstar Inc.
"The summer bookings (for business jets) have been slow and it is a very crowded space. The prospective buyer would have to be a new entrant with deep pockets."
Hawker's competitors include General Dynamics Corp's (GD.N) Gulfstream and Textron Inc's (TXT.N) Cessna, as well as Brazil's Embraer SA (EMBR3.SA) and Canada's Bombardier.
Hawker, which will file an amended reorganization plan, said general unsecured claims will be canceled and holders will receive equity in the reorganized company. Under the new plan, the company will receive a new loan and will be able to repay its $400 million in debtor-in-possession financing.
The new reorganization plan, which is subject to approval from the bankruptcy court, has the support of major creditors, Hawker said. A hearing is expected on November 15, it said.
Goldman Sachs's private equity unit and Canada's Onex, bought Raytheon Aircraft Co from Raytheon Co (RTN.N) for $3.3 billion at the height of the buyout boom in early 2007 and renamed it Hawker Beechcraft.
The company, loaded down with debt from the buyout, went into a tailspin after 2008 financial crisis and subsequent economic downturn.
The case is In re: Hawker Beechcraft Inc, U.S. Bankruptcy Court, Southern District of New York, No:12-11873.
(Reporting by A. Ananthalakshmi and Tanya Agrawal in Bangalore; Editing by Don Sebastian and Ted Kerr)