Beechcraft Corp., the
U.S. planemaker whose aircraft have trained military pilots since World
War II, is for sale again, people with knowledge of the matter said.
Credit
Suisse Group AG is contacting potential suitors on their interest in
acquiring Beechcraft, said the people, who asked not to be identified
because the discussions are private. Beechcraft may fetch about $1.5
billion, another person said. Cessna Aircraft parent Textron Inc. is
among companies exploring a bid, said two of the people.
Beechcraft
could be attractive to companies focused on smaller defense and general
aviation aircraft after shedding debt from an earlier leveraged buyout
and shutting a struggling jet unit, said Richard Aboulafia, aerospace
analyst with Teal Group, a Fairfax, Virginia-based consultant.
“You get military trainers, you get the world’s most popular turboprop aircraft,” Aboulafia said in a phone interview.
Slumping
demand for private jets and curbs on U.S. defense spending led the
company, formerly known as Hawker Beechcraft, to file for bankruptcy in
May 2012. Negotiations to sell it for $1.79 billion to a Chinese buyer
collapsed months later. Beechcraft exited court protection in February
and has publicly said it’s selling Hawker assets to focus on
propeller-driven and military planes.
‘Good fit’
At
the right price, Beechcraft could be a good fit for Textron, whose
holdings include Bell helicopters, military drones and Cessna aircraft,
Textron CEO Scott Donnelly said during a July 2012 quarterly earnings
call after the Chinese bid for Beechcraft was made public.
“I
think some of the assets of the company are interesting and would be a
good fit in our company and that we could do the right thing for their
existing customers and our customers -- it would all work,” Donnelly
said at the time.
Beechcraft’s twine-engine King Air turboprops
would compliment Cessna’s single-engine Caravan line, especially after
Beechcraft landed a $788 million order in August, said Brian Foley, who
heads Brian Foley Associates, a Sparta, New Jersey consultant.
The King Air division is Beechcraft’s most valuable asset and biggest driver of its profits, Foley said in a phone interview.
“They
practically rule the twin-engine general aviation market,” he said.
“They have a very good brand, loyal customer following.”
A
spokesman for Credit Suisse declined to comment. Nicole Alexander, a
spokeswoman for Beechcraft, and David Sylvestre, a spokesman for
Providence, Rhode Island-based Textron, both declined to comment.
Cessna, Bombardier
Beechcraft,
based in Wichita, Kansas, is now controlled by its former creditors.
Centerbridge Partners LP, Sankaty Advisors LLC and Angelo, Gordon &
Co. are among the funds that own a combined stake of about 90 percent
and took control following the bankruptcy, according to the company.
Before bankruptcy, Hawker Beechcraft was owned by Goldman Sachs Group
Inc. and Onex Corp.
Negotiations to sell
Hawker Beechcraft to Superior Aviation Beijing Co. ended in 2012 while
the planemaker was reorganizing, partly because of questions about the
Chinese company’s financing, people familiar with the process said at
the time.
Recovery in Demand
Beechcraft, whose competitors
include Canada’s Bombardier Inc. and Brazil’s Embraer SA, is now seeing a recovery in demand and estimates first-half
deliveries rose 67 percent to 115 airplanes. King Air sales will help
drive up revenue and earnings “materially” this year and the next,
Standard & Poor’s said in April.
Signs of a recovery are also
evident in worldwide aircraft shipments tracked by the General Aviation
Manufacturers Association, a trade group. Deliveries of multi-engine
turboprops rose 71 percent in the first half of 2013 versus a year
earlier and single-engine turboprop deliveries rose 3.8 percent.
Piston-engine airplanes increased 16 percent, while business jet
shipments fell 4.1 percent.
“We’ve already turned the corner,” said Foley, who described business jets as a lagging indicator for the sector.
Any
deal involving Beechcraft’s defense assets being sold to non-U.S.
suitors would be subject to a review from the Committee on Foreign
Investment in the U.S.
Beechcraft had previously announced plans
to sell by the end of the year assets from its shuttered Hawker and
Premier IA jet units, including certificates, spare parts and a
manufacturing plant. Foley said he expects those assets to still be sold
separately from the rest of the company.
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