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Changing operations at Savannah River Site

By John Bankston and Brandon Haddock
Staff Writers

 The parent company of Savannah River Site's top contractor has announced that it might seek bankruptcy because of financial difficulties.

 Washington Group International Inc. announced Friday that it was facing severe ``near-term liquidity problems'' because of a dispute over its acquisition of Raytheon Engineers & Constructors.

 The company is in default under some terms of its credit agreements and has been unable to secure bonds necessary to receive new projects, according to a statement. As a result of its difficulties, Washington Group will delay its fourth-quarter and fiscal 2000 earnings announcements until March 16.

 Washington Group was formed in July, after the former Morrison Knudsen Corp. acquired Raytheon Engineers & Constructors. The company owns Westinghouse Savannah River Co., which operates SRS under contract with the U.S. Department of Energy.

 Washington Group's government-services arm is building a $6 million corporate headquarters in downtown Aiken.

 A local Washington Group spokesman said the company's SRS operations should not be affected by the tumult.

 ``Things like Savannah River operate on a government letter of credit, so nothing would be different for their operations than in the past,'' said Jack Herrmann of Washington Group's government-services arm in Aiken.

 The Energy Department renewed Westinghouse Savannah River's contract in January. The six-year deal has an estimated value of $8.4 billion.

 Washington Group's stock plunged 79.38 percent after Friday's announcement, to $1.65 per share, with more than 6.8 million shares traded. The stock's 52-week high is $12.30 per share.

 Washington Group and Raytheon Corp. swapped accusations about the cause of the financial difficulties.

 Washington Group stated that Raytheon failed to provide paperwork that would finalize the purchase price of Raytheon Engineers & Constructors.

 That price - a cash payment of $53 million and the assumption of $450 million in debt - was subject to change after an audit of Raytheon Engineers & Constructors, Washington Group said.

 ``The purchase price adjustment should have been determined by now,'' Dennis Washington, chairman and CEO of Washington Group, said in a prepared statement. ``And if we had it, we simply wouldn't be in this position.''

 In a response, Raytheon said it failed to produce the audited balance sheet because Washington Group had not delivered its own necessary paperwork. Raytheon also said it did not believe the purchase price would change.

 Changing operations at Savannah River Site

 November 1950: Creation of Savannah River Site, then called Savannah River Plant, is announced. E.I. du Pont de Nemours and Co. is selected to operate the site.

 1989: Under a new contract, Westinghouse Electric Co. takes over the operation of SRS from DuPont. A subsidiary, Westinghouse Savannah River Co., is formed to operate the site for the U.S. Department of Energy.

 March 1999: Morrison Knudsen Co. and British Nuclear Fuels Ltd. acquire Westinghouse Electric Co. in a $1.1 billion buyout. In the deal, the two companies also acquire Westinghouse Savannah River Co., which is placed under a newly formed subsidiary, Westinghouse Government Services Group.

 July 2000: Morrison Knudsen agrees to buy Raytheon Engineers & Constructors from Raytheon Co. for $53 million in cash and the assumption of $450 million in debt. Morrison Knudsen also changes its name to Washington Group International Inc.

 March 2001: Washington Group International Inc. announces it is facing financial difficulties and might file for bankruptcy.

 Reach John Bankston at (706) 823-3352 or jbanks15@hotmail.com; Brandon Haddock at (706) 823-3409.