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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.
Sources:
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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