Hawker hires Perella Weinberg Partners to renegotiate revolving credit facility

Hawker Beechcraft Corporation, and its two owners Goldman Sachs and Onex, have hired Perella Weinberg Partners to help renegotiate covenants on its $240 million first lien revolving credit facility.

Although it has not breached conditions concerning the amount of cash it holds, both Standard & Poor’s and Moody’s have said that there is a risk this could happen in 2012. The facility expires in 2013 and Hawker has been expected to renegotiate with lenders for several months.

“We are entering a phase of our business during which we will likely need to address our revolving credit agreement which was last amended more than two years ago,” said Hawker Beechcraft in a statement. “In order to do this in a timely and effective manner, we are retaining the services of a highly respected consulting and financial services firm, Perella Weinberg Partners, to augment our finance team in business plan development and general corporate advisory services.”

Lenders are likely to agree to the suggested changes but they will want a higher interest rate and perhaps other covenants in return. The three biggest lenders to the revolver are thought to be Citi, Export Development Canada and Goldman Sachs.

“The lenders will do this, and shareholders still seem supportive, but higher interest rates will cut into Hawker’s cash-flow,” says one business jet finance specialist. “The big thing is that no one wants Hawker to file for bankruptcy. Everyone wants them to hang on until the business jet market picks up.”

It is almost six years since Onex and Goldman Sachs paid $3.3 billion to buy Raytheon Aircraft Company. Together with the manufacturer’s management team the two companies invested $1.05 billion of equity and borrowed the rest in a mixture of Payment in Kind (PIK) notes, secured notes, synthetic letters of credit and loans. The majority of these expire in 2014.