A start-up founded by a Qingdao-born businessman two years ago is set to take over the troubled 80-year-old Hawker Beechcraft company with a US$1.79 billion bid.
Beijing-based engine manufacturer Superior Aviation Beijing has entered exclusive talks with the Kansas-based aircraft maker, allowing the parties to conduct due diligence over the next 45 days.
The two parties are expected to come up with a restructuring plan for the new company to win the support from Hawker Beechcraft's creditors. The company filed for bankruptcy protection in May and is owned by Goldman Sachs Capital Partners and Onex, a Canadian private equity firm.
Superior Aviation spokesman Qian Chunyuan said the company was 60 per cent owned by Cheng Shenzong and his wife, with the remaining 40 per cent held by a private equity fund, run by Beijing Economic-Technological Development Area, a unit of the Beijing municipal government.
It's not the first time Cheng has emerged as a white knight to financially strapped US firms. He acquired bankrupt Superior Air Parts from the liquidator in 2009 and formed Superior Aviation Beijing the following year. Superior Air Parts was the world's largest aftermarket piston aircraft parts manufacturer for general aviation aircraft engines.
Since acquiring know-how from Superior Air Parts, Superior Aviation had developed two types of piston engines that had been certified by the US Federal Aviation Administration and the Civil Aviation Administration of China, Qian said.
Cheng amassed his capital from property development and international trading, Qian said. But he did not disclose his boss' total assets.
'The Beijing [municipal] government will provide subsidised interest rates or arrange interest-free bank loans for Superior to proceed with the deal,' Qian said. It is understood that most of the financing for the US$ 1.79 billion deal will be through bank loans, given none of Superior Aviation's engines has entered commercial production yet due to the lengthy certification process.
Superior Aviation promised to maintain Hawker Beechcraft's existing operations while thousands of the American jobs will be intact. The transaction will not include Hawker Beechcraft's military assets, which will remain a separate entity.
Hawker Beechcraft chief Robert Miller said in a statement: '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 chairman Bill Boisture also said the decision to enter deeper talks was because Superior had the highest bid. Meanwhile, the strategy and future planning of Superior would also be of benefit to the continuity of its business.