Agee Leaving Morrison In Turmoil Boise-Based Construction Firm Reeling From Flood Of Bad News

Morrison Knudsen Corp.’s debt rating fell to one notch above junk-grade status and its stock declined further Thursday, one day after the company disclosed more losses, defaults and elimination of its dividend.

The big construction and engineering concern, based in Boise, also said Wednesday that it probably would sell its non-core businesses and that chief executive William J. Agee, one of the most notable American corporate bosses of the past 15 years, plans to retire.

The cascade of bad news led Standard & Poor’s Corp. to lower its rating on Morrison’s senior debt to triple B-minus from triple B, and place the company on its CreditWatch list. About $20 million of longterm debt is affected.

S&P also withdrew the company’s A-3 rating on commercial paper, another type of short-term debt sold by companies. The ratings downgrades will make it more expensive for Morrison to borrow.

Morrison said Agee told the board in October that he planned to retire sometime in 1995, though it was not publicly announced then.

Agee, 57, was one of the highprofile leaders of the takeover era in the 1980s. He is perhaps best-known for his unsuccessful attempt, while head of Bendix Corp. in 1982, to take over Martin Marietta Corp.

Martin Marietta defended itself by trying to buy Bendix, a maneuver that became known as the Pacman defense.

When he took over Bendix in 1977, Agee was one of the nation’s youngest CEOs. The company grew swiftly under his leadership, thanks in large part to good investments and asset sales.

Morrison is perhaps best known for its Herculean construction projects of decades past, including Hoover Dam and the trans-Alaska oil pipeline. When it hired Agee in 1988, he steered the company into building railroad cars and locomotives, and focused on fewer traditional construction projects.

The plan’s success rested on Agee’s bet that there would be big growth in public and private rail projects, from urban light-rail lines to high-speed intercity “bullet” trains.

But Morrison reportedly underbid some projects, others were delayed and the growth never developed. Earnings were stagnant under Agee’s reign.

The Wall Street Journal, citing documents and company managers it did not identify, said Thursday that Agee ran the company mostly from his Pebble Beach, Calif., home and spent company money on a corporate jet for private use, landscaping for his home and a painting of him and his wife.

Company spokesman Rod Hunt said Agee would not comment on the report. He also said the company had no comment on the debt rating.

Morrison announced Wednesday that it expects major write-downs on construction and transit projects and the write-off of its Vertex hazardous-waste incineration operation in Arkansas. That will lead to additional losses for 1994, it said in a statement.

Pretax losses for 1994 through Sept. 30 totaled $59 million. The company plans to release its fourthquarter results at midmonth.

In trading on the New York Stock Exchange, Morrison stock closed at $9.12 1/2 a share, down 37 1/2 cents from Wednesday’s close. The share price fell $3, or 24 percent, on Wednesday.

Morrison stock had traded as high as $29.87 last year.