Lenders Wary Of Morrison Knudsen’s Future Troubled Boise-Based Company Running Out Of Money, Options

By demanding $31 million before approving another loan extension, Morrison Knudsen Corp.’s lenders are saying they are unsure the company will survive, experts said.

“It appears as if their resources are running out and their options are running out,” Max Burns of Smith Barney Shearson said Wednesday.

Morrison Knudsen stock lost 14 percent of its value on Wednesday after the company announced it was increasing its 1994 loss estimate from $315 million to $350 million. The stock recouped 25 cents Thursday, closing at $5.75.

The Boise-based company said it increased the loss estimate in part because it set aside $30 million to settle 19 shareholder lawsuits.

Wall Street also was responding to the demand from lenders that Morrison Knudsen pay off $31 million of its debt, and to hints that the company may issue new common stock to raise cash, analysts said. Such a move would dilute the value of stock now in circulation.

“You’ve got dogs nipping at every corner of their heel,” Burns said. “If you had all this credit-card debt and no assets, what would you do to put the wolves at bay?”

Morrison Knudsen Chairman Steve Miller said that the company would avoid bankruptcy as long as negotiations continue with its 28 lenders and its bonding company.

However, he conceded that Morrison Knudsen would be forced to seek bankruptcy protection from its creditors if those talks break down.

“The banks have us on a tight leash. That’s not great, but it says they are continuing to work with us,” Miller said. “They could have blown our brains out on June 1, and they didn’t.”

He referred to a $122 million bridge loan that expired May 31. That loan has been extended to July 31.

The $31 million payment will use up most of the cash Morrison Knudsen received from selling MK Gold Co. and Western Aircraft.