Next Covenant Tripper Could Be GS Capital’s Hawker Beechcraft
As the deleveraging process continues, yet another over-levered buyout-backed company faces a covenant breech. GS Capital and Onex Partners-backed aircraft maker Hawker Beechcraft is expected to inject more cash into the company, according to Debtwire. The company has “burned through” $140 million in the past five weeks and is expected to fully draw down its revolver to buy back bonds before GS Capital or Onex infuse any more cash, the news service reported. An injection of cash, above the firms’ $1 billion equity check in 2007, is expected in exchange for covenant relief. This indicates the company’s backers aren’t planning to push it into Chapter 11. Last month S&P lowered the company’s corporate credit rating to ‘B-’ from ‘B+’. The ratings agency cited the potential for distressed redemption offers for the company’s debt as one reason for the downgrade. Amendments and exchange offers are becoming more common as buyout-backed companies seek to avoid costly bankruptcy proceedings. The trend could very well strengthen after the U.S. government managed to turn the entire Chapter 11 bankruptcy process on its head this week.
