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Washington Group International Inc., the nation’s fourth-largest construction company, stated Monday it is suing Raytheon Co. for more than $905 million in unexpected liabilities stemming from WGI’s acquisition of Raytheon’s engineering-and-construction international unit last July. On Friday, WGI, of Boise, Idaho, announced it might be forced to seek Chapter 11 bankruptcy protection if Raytheon failed to pay a “substantial” purchasing price adjustment. Because of its liquidity problems, WGI also said it would delay the release of fourth-quarter earnings results until March 16. The suit was filed Feb. 27 at the 4th District Court for the county of Ada, Idaho. WGI, the former Morrison Knudsen, paid $53 million plus the assumption of $450 million in liabilities when it bought Raytheon’s unit last year. It afterwards uncovered cost overruns associated with certain projects of the unit. Those liabilities, said Dennis R. Washington, WGI’s CEO, were discovered to be substantially larger than originally reported in Raytheon’s unaudited balance sheet. WGI stated in a conference call Monday that it had found an extra $180 million in liabilities in addition to the $725 million estimated on Friday. “Raytheon should live up to the terms of the acquisition agreement they signed. A deal is a deal, and they should honor their commitments. The information on their balance sheet was not complete,” said Washington. In a rebuttal statement Friday, Raytheon claimed it had not provided an audited balance sheet because of “WGI’s failure to provide on a timely basis the information required under Generally Accepted Accounting Principles necessary for Raytheon to provide a balance sheet as of April 30, 2000.” “We are not withholding the balance sheet; the auditors are required to certify the balance sheet and they haven’t supplied the backup information for it,” a Raytheon spokesman said. WGI has $700 million in debt and $200 million in cash, as well as $164 million left in a $500 million revolving-credit facility. It is under default for that facility. In the meantime, WGI said it plans to fulfill all contracts — including those involved in the cost overruns — and that it met Friday with its bank creditors and customers to obtain a $300 million to $400 million cash booster by the end of the month. “We want to find a solution to our liquidity problems as soon as possible, and I am hopeful we’ll have it done by end of month,” said WGI spokesman Brent Brandon. WGI is an international engineering and construction firm employing approximately 39,000 people in 43 states. Copyright �2001 TDD, LLC. All rights reserved.

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