Seattle: Hawker Beechcraft Inc., the bankrupt business jet maker owned by Goldman Sachs Group Inc. and Onex Corp., may draw higher bids after agreeing to sell itself to Superior Aviation Beijing Co. for $1.79 billion (Dh6.57 billion).

Superior will make payments over the next six weeks to help keep Hawker afloat until the deal closes, the companies said yesterday. The accord makes Superior the so-called stalking horse bidder in a US Bankruptcy Court-supervised auction that may win more offers. Textron Inc. and Embraer SA expressed interest previously in Hawker’s assets.

Hawker Beechcraft sought bankruptcy protection in May after the company and other private jet manufacturers struggled with lower demand following the recession. The planemaker’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.

Merging with Superior would provide more “access to the Chinese business and general aviation marketplace, which is forecast to grow more than 10 per cent a year for the next 10 to 15 years,” chief executive officer Steve Miller said yesterday.

Hawker retained Perella Weinberg Partners LP as a financial adviser in December and hired Miller, a turnaround specialist, in February. Net losses totalling more than $900 million in two years due to shrinking plane sales and declining US military contracts prompted Hawker’s bankruptcy.

Eight bids

Before its filing, the company and Perella Weinberg identified 35 potential buyers from strategic purchasers to private equity firms, according to a court document. The company received eight bids from mid-May through mid-June, according to the filing.

A sale to Superior Aviation would be a threat to Textron’s Cessna, Julian Mitchell, an analyst with Credit Suisse in New York, wrote in a note on Tuesday. A company controlled by the Beijing municipal government owns 40 per cent of Superior, which would “substantially reduce” Cessna’s chances in China, he said.

“The Chinese have made substantial inroads into global market shares in other transportation industries such as shipbuilding and railway rolling stock, and we do not see why business jets are particularly impervious,” Mitchell wrote. Even with Hawker Beechcraft struggling, Cessna’s pricing had been “soft”, he said.

‘Most attractive’

Bill Boisture, chairman of Hawker Beechcraft, said the decision to move forward with the Chinese bidder was “based on two key factors: the bid for the company was the most attractive we received during the strategic review process and the going-forward plan offered the most continuity for our business.”

Boisture said Superior is committed to maintaining Hawker Beechcraft’s strong presence in the US as well as its employee base and management team.

Superior plans to fund the acquisition with its own capital and loans from Chinese banks, Qian Chunyuan, its spokesman, said in a telephone interview today. The Beijing-based company is confident it can conclude the deal, he said.

The Chinese company acquired Superior Air Parts Inc. in 2010 after the Texas-based engine maker filed for bankruptcy protection, Qian said. The US manufacturer is now profitable, according to Qian.

Superior Aviation is 60 per cent owned by chairman Cheng Shenzong, he said. Cheng’s other holdings include Qingdao Haili Helicopter Co. and Qingdao Brantly Investment Group.

Textron interest

Hawker’s aircraft include the Hawker 4000 business jet and the Beechcraft King Air propjet. The company competes with planemakers, including Textron’s Cessna Aircraft Co., Embraer, Gulfstream Aerospace Corp. and Bombardier Inc.

Textron is interested in buying Hawker for its propeller-driven business planes and military training aircraft, chief executive Scott Donnelly said in an interview yesterday at the Farnborough air show near London before Superior’s announcement. The Superior Aviation deal doesn’t include Hawker’s defence business.