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http://www.wantchinatimes.com/news-subcl....
2012-07-12

Cheng Shenzong, chairman of Qingdao Haili Helicopter Manufacturing and Superior Aviation Beijing, has agreed to acquire the financially troubled Hawker Beechcraft of the US for US$1.79 billion.

Earlier in his career, Cheng was a small businessman engaged in import and export, real estate and hotels. Since 2007, he has switched to the general aviation field, establishing Qingdao Haili Helicopter Manufacturing and becoming its chairman. The company is located in the Qingdao Development Zone in Shandong province, with registered capital of US$10.25 million and total investment of US$23.25 million, occupying an area of approximately 100 acres.

The little-known businessman became a big shot in 2009 after buying Superior Air Parts in the US, which had filed for bankruptcy, for US$7 million, earning himself the name "King of the Chinese Helicopter."

By the invitation of Beijing's vice mayor, Haili moved its headquarters to the Beijing Economic Development Area in 2010. Cheng hopes that through the trading business, the helicopters and engines made by Superior can be sold around the world.

Superior is 60% owned by Cheng. The company plans to have an annual production capacity of 80 Brantly B-2B helicopters, according to Haili's website.

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http://www.sfgate.com/business/bloomberg....

July 10 (Bloomberg) -- 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.

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 U.S. Bankruptcy Court-supervised auction that may win more offers. Textron Inc. and Embraer SA, among others, expressed interest previously in Hawker’s assets...

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“This whole thing is exceedingly baffling and inexplicable,” said Richard Aboulafia, an analyst with Teal Group in Fairfax, Virginia. “The idea that a tiny parts company just out of bankruptcy and backed by completely unknown entities should be able to attract $1.8 billion to purchase and run a legacy jet manufacturer borders on the absurd.”...

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http://abcnews.go.com/US/wireStory/chine....
July 13, 2012

Cheng also is chairman of aircraft manufacturer Qingdao Haili Helicopter Co. Ltd. The Oriental Morning Post in Shanghai reported that this company has suspended helicopter production due to poor export orders...

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July 19, 4:02 pm
http://www.morningwhistle.com/html/2012/....

The sale of Hawker Beechcraft to its potential Chinese buyer is yet again under the microscope with newly disclosed information indicating that a deal may hard to finalize.

Journalists from 21st Business Herald, a leading business newspaper in China, conducted an in-depth investigation into Chen Shenzong, the industrialist behind the Hawker Beechcraft sale.

Known as the "Helicopter King of China," Chen, however, is actually quite new to aviation, with less than 5 years of experience in the industry.

Qingdao Haili Helicopter Co. Ltd., a helicopter manufacturer Chen owns in the eastern coastal city of Qingdao which makes B-2B light helicopters and unmanned helicopters, has suspended helicopter production for a whole half year due to poor export orders.

Meanwhile, his headquarter offices based in Qingdao, have recently hired a mere 9 employees.

An aviation insider told 21st Business Herald that the deal with Hawker Beechcraft is not feasible. The potential acquisition will most likely be reduced to a farce.

He describes Chen as an enthusiastic person but one who knows little about the aviation industry. “His actions have no direction at all and he lacks a successful history of projects.”

The $1.79 billion deal is not a small one, even for a state-owned company, let alone a private entrepreneur. Yet Chen responded to questions saying that the acquisition funds are fully prepared, some collected by the company and some borrowed from banks.

At present, the proposed acquisition has received approval from the U.S. Bankruptcy Court for the Southern District of New York but was opposed by the U.S. Machinists Union amid fears about the deal's impact on national security as well as worker pensions.

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http://www.wantchinatimes.com/news-subcl....
2012-07-20

News that the Beijing-based Superior Aviation has offered to take over US commercial aircraft maker Hawker Beechcraft surprised many market analysts, as Cheng Shenzong, the Chinese founder of Superior Aviation, is not well known even in China, reports the 21st Century Business Herald in Guangzhou.

Cheng, who is from Qingdao, Shangdong province, started working as a trader in 2001, when he founded China Kingdom Industrial in the eastern Chinese city to sell fuel.

He also engaged in real estate development, although few people in the industry knew him, probably because he was not very successful and exited that market in 2007, reported the newspaper.

In the same year, Cheng set up Qingdao Haili Helicopter and took over US helicopter maker Brantly International in Texas. The bankrupt Brantly was actually bought by Beijing Foreign Enterprise Service Group and given to Cheng free of charge.

Haili was touted to be the only private company among China's three helicopter builders at the time, and Cheng was called China's acquisition tycoon.

However, a reporter from 21st Century Business Herald who visited Haili's factory in Qingdao found that the company halted operations in March this year.

Chen went on to set up Weifang Tianxiang Aeronautical Company in May, 2009, to produce unmanned drones. In order to obtain the know-how for making aircraft engines for its drones, Weifang Tianxiang Aeronautical bought Texas-based Superior Air Parts for US$7 million in September, 2009, and set up Superior Aviation in Beijing to operate SAP. Cheng said he was planning to list SAP sometime in 2014 or 2015 in the US.

Weifang Tianxiang Aeronautical sold three drones for the price of 20 million yuan (US$3.16 million) in September last year, which is the only sale it has made thus far, according to the 21st Century Business Herald.

Earlier this month, Cheng began his third takeover bid. This time, the target was Hawker Beechcraft in Wichita, Kansas, which carried a price tag of US$1.79 billion.

Hawker Beechcraft, founded in 1932, is a leading maker of business and special-mission aircraft, with more than 8,000 employees around the world. In 2007, the company delivered 430 airplanes and posted revenue of US$3.5 billion.

In contrast, Cheng's headquarters in Qingdao had only nine workers. Cheng refused to be interviewed, while his employees in Qingdao said Chen's representatives were on an inspection tour to Hawker Beechcraft, and negotiations with the company were going on...

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Who Is Superior Aviation?
http://blogs.wsj.com/privateequity/2012/....
July 10, 2012

The Chinese company that is in advanced talks to acquire the bulk of bankrupt aircraft manufacturer Hawker Beechcraft Inc. for $1.79 billion has trolled U.S. bankruptcy courts to purchase assets in the past.

Superior Aviation Beijing Co., the presumptive stalking-horse bidder for Hawker, which was backed before Chapter 11 filing by Goldman Sachs Capital Partners and Onex Corp., bought Texas engine-maker Superior Air Parts out of bankruptcy in 2010.

According to Bloomberg News, Superior is 60% owned by Chairman Cheng Shenzong, a Chinese businessman whose other holdings include Qingdao Haili Helicopter Co. and Qingdao Brantly Investment Group.

Haili Helicopter’s Chinese website shows that the company was founded in August 2007 in the Eastern China coastal city of Qingdao. The company’s total investment was $23.35 million, with a registered capital base of $10.2 million. It was designed to have an annual production capacity of 80 Brantly B-2B helicopters, the website shows.

The aircraft has two to five seats each and is used by firefighters, riot police and civilians, according to a transcript of a television newscast posted on Haili’s website.

Haili – meaning “seaworthy” in Chinese, loosely – obtains design and production authorization, as well as certification by the Federal Aviation Administration of the U.S., through a joint venture, the website says. The site features pictures of helicopters hovering over a cityscape with a bay view.

Qingdao Brantly’s website, meanwhile, isn’t functional.

Haili’s website, however, offers the link to the website of another company that bears the same corporate logo as that of Brantly International Inc., a helicopter manufacturer based in Vernon, Texas. All of Brantly International’s manufacturing is being done at the company’s “parent facility in Qingdao, China,” its website states.

Brantly traces its roots to Newby O. Brantly, who designed B-2 helicopters around 1953, the website shows. Brantly International is now run by President Kyle Hardman...

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http://aerospaceblog.wordpress.com/2012/....
July 21, 2012

Hawker Beechcraft is beginning exclusive negotiations to sell most of the company to Superior Aviation Beijing after receiving approval from the U.S. Bankruptcy Court for the Southern District of New York on July 17.

HBC on July 10 formally sought court clearance to begin the negotiations after receiving a $1.79 billion proposal from the Chinese firm for all but the defense business.

Superior Aviation has agreed to make an initial deposit of $25 million by the end of the week and a second $25 million deposit within 30 days to keep certain HBC aircraft lines in production that Hawker Beechcraft says it otherwise would shutter.

The companies would negotiate a definitive agreement for up to 45 days that would serve as a stalking horse proposal for competitive bids under the bankruptcy process.

If the companies are unable to reach a definitive agreement, Hawker Beechcraft says it would seek approval for a preliminary reorganization plan filed June 30 that would have ownership of the firm transfer to the majority of its creditors in exchange for the elimination of about $2.5 billion in debt. That plan, which would keep Hawker Beechcraft as a standalone company, however, likely would mean significant changes in the HBC product line, including the end of its “jet-related businesses,” says the company, which filed for Chapter 11 bankruptcy protection on May 3...

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The reassurance comes as questions have been raised by the potential long-term plans of Superior, which is 60% owned by a privately held entity and 40% by a company controlled by the Beijing municipal government.

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The IAM also said that neither the company nor Superior has detailed “the degree to which the jets business will be maintained.” The agreement essentially would give Superior the unilateral right to impact the jet business. The IAM is also concerned about the agreement that call for refunds if the exclusivity agreement is terminated.

The IAM further notes that hampers its own negotiations with the company during the bankruptcy process, and it is particularly concerned about plans to terminate underfunded pension plans that would pass on to the Pension Benefit Guaranty Corporation (PBGC)...

Quote:

http://www.dailyfinance.com/2012/07/24/b....
07/24/12

...Recently, Hawker Beechcraft (HBC), a Wichita-based aircraft company, landed at the cutting edge of the bonus battle. Earlier this year, it entered bankruptcy and is now in the process of being sold to a Chinese firm, Superior Aviation Beijing Co. Ltd. In return for negotiating the sale of the company, HBC's nine top executives are hoping to get more than $5.3 million in bonuses -- 200% of their base salaries. Meanwhile, another 31 members of management will presumably split $1.9 million.

And what of HBC's workers? In preparation for the sale, the company is trying to shed its pension fund, which is currently $751 million in the hole. To put it mildly, the company's new Chinese owners don't want responsibility for its pensions; one plan is to dump responsibility for the fund onto taxpayers through the Pension Benefit Guaranty Corporation, an agency of the federal government.

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Even apart from the costs of providing for the company's laid-off workers, much of the bill for HBC's downfall has landed on taxpayers. In 2010, the company struck a deal with the state of Kansas, promising to keep 4,000 jobs in Wichita until 2020, in exchange for which it received $45 million in tax benefits.

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To put it mildly, the company's new Chinese owners don't want responsibility for its pensions; one plan is to dump responsibility for the fund onto taxpayers through the Pension Benefit Guaranty Corporation, an agency of the federal government.

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You couldn't pay me enough to get into a Chinese engineered eggbeater.

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BRIDGEPORT —United Technologies Corp.agreed to pay $75 million in fines, and Pratt & Whitney Canada pleaded guilty Thursday to settle charges that the company violated arms control laws and made false statements about the export of software that controlled the engines inChina'sfirst military attack helicopter.

Federal prosecutors described the export program involving the Z-10 attack helicopter as a calculated effort by Pratt & Whitney Canada to claim the dominant position in helicopter engines in China.

"Pratt & Whitney Canada exported controlled U.S. technology to China, knowing it would be used in the development of a military attack helicopter in violation of the U.S. arms embargo with China," U.S. Attorney David B. Fein said. The company "took what it described internally as a 'calculated risk' because it wanted to become the exclusive supplier for a civil helicopter market in China with projected revenues of up to $2 billion."

Quote:

http://www.bizjournals.com/wichita/blog/....
July 24, 2012

The U.S. Department of Justice on Monday filed an official objection to the bonuses Hawker Beechcraft Corp. is seeking to pay eight of its executives.

Hawker filed documents with the U.S. Bankruptcy Court earlier this month seeking the court’s approval to pay up to $5.3 million in bonuses to its senior leadership team.

Hawker tied the bonuses to specific milestones in its Chapter 11 restructuring process or to any sale of the company...

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“You got to be kidding me. Bonuses?” Matt McKinnon, legislative and political director for the Machinists union, told the AP. “And you know, really when I look at the company that owns Hawker Beechcraft, Goldman Sachs — and what the country went through with them and bonuses — I guess I shouldn’t be surprised.”

Quote:

http://www.kake.com/news/headlines/Hawke....
Thursday, August 2, 2012

Layoff notices have been sent to dozens of Hawker Beechcraft employees at the company's facility in Arkansas.

In a letter sent to employees Thursday, executives said 170 workers will receive Worker Adjustment and Retraining Notifications. The layoffs affect hourly and non-hourly employees across multiple levels.

Bill Boisture, Hawker chairman and president, and Steve Miller, CEO, said the company has been working to resize its operations in Wichita. But they said additional challenges forced the company to make further cuts in Little Rock.

Hawker currently employs about 450 workers in Little Rock.

The news comes pending a $1.79 billion sale with Chinese aviation company, Superior Aviation Beijing Co., Ltd. The machinists union for Hawker is trying to block the proposed sale.

Hawker also filed for bankruptcy protection in May.