Moody’s downgrades Hawker Beechcraft

Moody’s
Investors Services has downgraded the ratings of Hawker Beechcraft Acquistion
Company to Caa3 with a probability of default of Caa3.

The
rating agency has also assigned a limited default (LD) designation because the
company deferred bank interest that was due on March 30.

“The
liquidity profile is weak due to very high financial leverage and the large
size of near-term debt obligations,” said Moody’s explaining the downgrades. “Although
the company disclosed that coupon payments due April 1, 2012 on its senior and
subordinated notes went unpaid, those indentures provide for a 30-day grace
period.”

Moody’s
also says Hawker Beechcraft’s debt has a negative outlook. “The negative
outlook continues, reflecting Hawker Beechcraft’s ongoing pursuit of a
financial restructuring that would likely result in significant loss for
creditors,” said Moody’s. “The probability of default rating could be lowered
further if the company were to seek protection under the U.S. Bankruptcy Code
or if, in Moody’s view, the company were to come into default on most of its
debt.”

Moody’s
ratings changes on April 5, 2012

Corporate
family to Ca from Caa3

Probability
of default to Ca/LD from Caa3

$240.3
million first-lien revolver due 2013, to Caa3 LGD3, 33% from Caa2 LGD3, 30%

$1,471
million first-lien term loan due 2014, to Caa3 LGD3, 33% from Caa2 LGD3, 30%

$198.5
million first-lien incremental term loan due 2014, to Caa3 LGD3, 33% from Caa2
LGD3, 30%

$75.0
million synthetic letter of credit facility due 2014, to Caa3 LGD3, 33% from
Caa2 LGD3, 30%

$182.9
million senior unsecured notes due 2015, to C LGD5, 81% from Ca LGD5, 80%

$302.6
million senior unsecured PIK-election notes due 2015, to C LGD5, 81% from Ca
LGD5, 80%

$145.1
million senior subordinated notes due 2017, to C LGD6, 95% from Ca LGD6, 95%

Speculative
grade liquidity, unchanged at SGL-4

Rating
outlook, Negative