Bankrupt aircraft maker Hawker Beechcraft Inc said it was in exclusive talks with a Chinese aerospace firm over a sale of the company for $1.79 billion.
Superior Aviation Beijing Co's offer, which is subject to an auction process if finalised, is likely to flush out higher bids from other interested parties, bankers said.
The Chinese maker of plane engines and parts has also offered to fund Hawker Beechcraft's jet operations over the next six weeks.
The company, partly owned by the Beijing municipality government, will not buy the Hawker Beechcraft's defense business.
"Superior has had a long-standing interest in the commercial aircraft business of Hawker Beechcraft, having first approached the company several years ago regarding a potential strategic partnership," Hawker Beechcraft said in a statement on Monday.
Hawker Beechcraft, owned by Goldman Sachs Group Inc's private equity arm and Onex Corp , filed for Chapter 11 bankruptcy in May, unable to support a $2.5 billion debt load amid a weak business jet market.
The Wichita, Kansas-based maker of business jets, general aviation turboprops and military trainers had filed a reorganization plan which will give secured lenders at least 81 percent of the company's equity when it emerges from bankruptcy.
The company had then disclosed that after inviting nine interested parties to conduct due diligence, it asked six of them to revise bids.
Other aircraft makers such as Brazil's Embraer or Textron could also take a look at Hawker Beechcraft when the auction process starts, industry bankers said.
A deal would be subject to approvals from the Chinese government, the Committee on Foreign Investment in the United States and the bankruptcy court.
Hawker Beechcraft, whose exclusivity period with Superior runs for 45 days, has not yet decided whether to sell the defense business or keep it as a separate entity.
While foreign buyers may struggle to win regulatory approval, U.S.-based industry players or private equity firms could be interested in the defense business, industry bankers said.
British defense contractor BAE Systems has also been touted as a potential buyer.
If the defense business is sold to another company, up to $400 million of the $1.79 billion purchase price would be refunded to Superior, which is 40 percent owned by a company controlled by the Beijing municipal government.