Washington Group lawsuit seeks to protect creditors’ claims from Raytheon Company

BOISE, Idaho, Aug. 2, 2001 – Washington Group International, Inc. announced today that it has filed a suit against Raytheon Company seeking cash adjustments and the elimination of liabilities assumed by Washington Group that could total approximately $1.5 billion.

The adversary proceeding was filed in United States Bankruptcy Court for the District of Nevada in Reno in connection with Washington Group’s purchase from Raytheon Company of Raytheon Engineers & Constructors (RE&C) in July of 2000. Washington Group alleges that, because of hidden liabilities and overstated assets, RE&C was insolvent at the time of purchase.

Citing financial problems associated with the RE&C purchase, Washington Group and certain direct and indirect subsidiaries filed voluntary petitions to restructure under Chapter 11 of the U.S. Bankruptcy Code in the Nevada court on May 14, 2001.

“Today’s filing is to ensure that action taken by Raytheon Company during the 18-month period prior to our Chapter 11 filing will not deprive our unsecured creditors of hundreds of millions of dollars that should be available to them in the bankruptcy estate,” said Stephen G. Hanks, Washington Group President and Chief Executive Officer. “We filed this suit on behalf of these creditors.”

Washington Group alleges that, during the 18-month period prior to July 7, 2000, Raytheon Company required RE&C to transfer more than $475 million received in advance client payments on three power plant projects to Raytheon Company.

In addition, Raytheon Company grossly understated the estimate of liabilities being assumed by Washington Group.

“We want the Bankruptcy Court to take a hard look at the transfer of cash from RE&C to Raytheon Company after we began negotiations to purchase RE&C in September 1999,” said Hanks. “We also want the opportunity to provide the judge with an accurate picture of RE&C’s financial situation at the time of the purchase. If we prevail in court, we will finally get to the truth which may provide a sizeable recovery for the Trust from which our unsecured creditors will draw.”

Hanks said investigations by Washington Group and its outside consultants lead the company to believe that this lawsuit has merit and will be successful.

Washington Group International, Inc., is a international engineering and construction firm. With more than 35,000 employees at work in 43 states and more than 35 countries, the company offers a full life-cycle of services as a preferred provider of premier science, engineering, construction, program management, and development in 14 major markets.


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