Construction Company Continues to Struggle One Year After Agee's Ouster
Feb. 09, 1996
BOISE, Idaho (AP) _ In the year since Morrison Knudsen Corp. ousted William Agee as chairman, the company that built the Golden Gate Bridge and Hoover and Grand Coulee dams remains under a mountain of debt.
Morrison Knudsen disclosed this week that several New York-based investors had bought most of the $231 million it has in outstanding loans and is required to repay by year's end.
Whether those investors will allow the company to continue restructuring in a bid to survive is unclear.
Morrison Knudsen spokesman Brent Brandon said the group appears ``to have the long-term interest of MK as an ongoing franchise.''
On Friday, Brandon said that the Boise-based company's recapitalization, ``while in its early stages, is clearly on track.''
He said that ``all of the options under consideration include plans to continue providing world-class engineering and construction services to our clients.''
But former senior vice president Jack Lemley maintains that if the original lenders are selling of the loans, ``it would suggest they have no confidence in getting their investment back.''
The company itself told the Securities and Exchange Commission in a quarterly report submitted in November of ``conditions that raise substantial doubt about the corporation's ability to continue as a going concern.''
Without cash to keep operating and pay its debts, the report said, ``the corporation may, among other alternatives, seek protection from its creditors under the U.S. Bankruptcy Code.''
New efforts to turn the company around began on Feb. 9, 1995, when Agee was ousted by a board of directors angry over disclosures of a sea of red ink.
Agee, who retreated to his home in Carmel by the Sea, Calif., had failed in his efforts to expand the construction company into the more risky field of manufacturing mass-transit rail cars.
Robert S. Miller was brought in two months later as chairman, along with a new management team and optimism that the company could be salvaged. But the attempt took a turn last month Donaldson, Lufkin Jenrette, a New York securities firm that specializes in bankruptcy cases, was hired.
A former Morrison Knudsen finance manager, Jerry Beto, says continuing losses have ruined chances for the company to raise additional money through a stock offering.
Morrison Knudsen had a loss of $349.6 million in 1994 and $168.3 million through the first three quarters of last year.
Morrison Knudsen stock, which approached $30 a share in 1994, was trading at $2.87 1/2 Friday afternoon on the New York Stock Exchange, down 25 cents on the day.