Boise Firm Gains Time From Banks Lenders Delay Default Notice On Morrison Knudsen Loans

Morrison Knudsen Corp. bought a little more time Thursday when its lenders agreed not to declare a $150 million loan in default before March 31, the Dow Jones News Service reported.

The construction, engineering and rail concern said it hasn’t missed payments on its loans, but $141 million in losses for the fourth quarter left it in violation of some terms of those loans.

The lenders include J.P. Morgan & Co., Bank of America and Mellon Bank, people close to the situation said. If those lenders were to declare a default on the loan, it could set off a chain of events that could sap Morrison Knudson’s assets and hurt its operations.

There was speculation this week that Morrison would run out of cash if it didn’t get $125 million in new loans before March 3. The company didn’t indicate any success in securing that cash. It did suggest, however, that the agreement reached Thursday could help it secure new agreements with other lenders.

“We are extremely pleased that we have received this initial expression of support,” Morrison said in a statement. “We expect to use this waiver as a template to gain similar waivers from our other lenders.”

The news restored some investors’ confidence in the firm. Morrison stock rose $1.75, or 25 percent, to close Thursday at $8.87 a share on the New York Stock Exchange.

The company continued to emphasize that its discussions with lenders have been constructive and that its business prospects are good.

“Bankruptcy is not on the agenda, it is not under consideration, and it is not even an option,” a spokesman quoted acting chairman William Clark as saying.

Clark replaced William Agee as chairman earlier this month. Morrison officials have blamed the company’s problems on Agee’s policies, which included leasing rather than buying plants and equipment, as well as deferring some contract expenses.