Mk Mulls Packaged Bankruptcy

Morrison Knudsen Corp. has told shareholders it will begin talking to its creditors about filing a pre-packaged bankruptcy plan.

The disclosure came in the annual report for 1995 that the troubled company filed with the Securities and Exchange Commission.

Morrison Knudsen also said its loss for 1995 narrowed to $262 million, or $7.93 a share, from a loss of $349.6 million, or $10.75 a share, for 1994.

The Boise-based company said its orders declined 16 percent last year from 1994 because of a “reluctance of many potential customers to engage the corporation in new or additional projects.”

Any further decline in new business will affect its ability to stay in business, Morrison Knudsen said. A pre-packaged bankruptcy plan would let the company survive after settling with its creditors.

Creditors’ approval of such a plan would avoid a lengthy hearing in bankruptcy court.

Morrison Knudsen has been negotiating with creditors on a plan to swap $330 million in debt for new equity. A pre-packaged bankruptcy could let the company go ahead with that plan without the approval of its shareholders.

The debt-reduction plan is designed to satisfy the company’s secured creditors, mostly banks and investment funds that made loans in the past year, allowing it to stay in business. These creditors have first claim on Morrison Knudsen’s money.

Earlier this month, Morrison Knudsen paid off an old bridge loan of $129 million and got a new bridge loan of $47.5 million from its creditors.

Morrison Knudsen was about two months late in filing its annual results with the SEC. The company had asked for more time in order to gather information on the extent of its losses.

Revenue for the company in 1995 fell to $1.7 billion from $2 billion in 1994, according to the report.