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Posted 16 May 2001   For week ended May 18, 2001
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Sent on Mormon-News: 15May01

By Kent Larsen

LDS-led Construction Firm Files Chapter 11

BOISE, IDAHO -- Washington Group International, Inc., formerly known as Morrison-Knudsen, filed for protection under Chapter 11 of the US Bankruptcy Code today, due to financial troubles arising from litigation with Ratheon Co. The company, the fourth largest construction firm in the US, best known for its construction of Nevada's Hoover Dam, is headed by LDS Church member Stephen G. Hanks, who was recently named Business Leader of the Year by Ricks College.

The filing arises from litigation between Washington and Raytheon over Washington's purchase of an engineering and construction unit of Raytheon. Following the purchase, Washington discovered cost overruns and negative cash flows that Lexington, Massachusetts-based Raytheon failed to disclosed, Washington alleges. These allegations led Washington to file suit against Raytheon alleging fraud. The cost overruns led to a liquidity crisis at the company, necessitating the bankruptcy filing.

Washington has reached an agreement in principle with its bankers outlining a plan of reorganization, said Hanks. "Under the plan announced today, management will remain in place, daily operations will continue as usual, our employees will be paid, and this business will move forward." The plan also calls for pursuing the litigation against Raytheon, and any proceeds will be used to pay creditors. The group will still continue its businesses with clients, employees, subcontractors and vendors despite the filing.

Hanks also said that it was unlikely that the company's current stockholders will see any return of their investment. Prior to the bankruptcy filing, Washington was valued at about $100 million. Following the announcement, the New York Stock Exchange announced that it had decided to drop the company's listing on the exchange. But Washington has a right to a review of that decision by a committee of the exchange.


Washington files Chapter 11 to restructure
Reuters 14May01 B4

Washington Group International, Inc. Reaches Restructuring Agreement With Bank Group
Files Plan of Reorganization and Chapter 11 Petition to Facilitate Restructuring
Business Wire 14May01 B4

NYSE says to delist Washington Group shares
Reuters 14May01 B4


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