Morrison Knudsen Corp. filed for protection from its creditors under federal bankruptcy laws on Tuesday, moving a step closer to a debt for equity swap and ultimate merger with Montana millionaire Dennis Washington’s construction company.
Federal Bankruptcy Judge Peter Walsh in Wilmington, Del., approved all the needed motions to keep the company operating and set Aug. 26 for a confirmation on the reorganization plan for the struggling construction and engineering giant.
In court papers, the Boise-based company listed assets of $541.7 million against liabilities of $783.6 million. The company fell on hard times after ousted Chairman William Agee pushed it into transit car construction.
Once the reorganization is finalized, the new creditor-owners will sell it to Washington Construction Group. Senior creditors will receive $13.3 million in cash and 24.1 million shares of the newly merged companies. Shareholders will receive five-year warrants for each 13 shares of Morrison Knudsen stock that give them the right to purchase stock in the merged company at $12 a share.