Montana businessman talks to shareholders about Raytheon, bankruptcy
BOISE, Idaho - Montana billionaire industrialist Dennis Washington apologized to Washington Group International stockholders on Friday for buying Raytheon Co.'s construction division in 2000 - a decision that drove the company into bankruptcy.
"I feel sorry I made you suffer for that," Washington said at the close of the company's first shareholders meeting since shortly after the acquisition.
Washington recalled rolling up nearly four decades of solid annual profits from his businesses only to make that one mistake "and it was a big one."
He was surprised that there were no questions at the close of the meeting, especially from the people "who lost all that dough."
"I can think back, not too long ago here, that I might never be in this room again," Washington told the several dozen shareholders who attended the session. "We had a lot of problems that seemed to be overwhelming."
He thanked many of the company's 30,000 employees worldwide for "hanging in with us" as the business was restructured and predicted that they have "put a company together that's going to be around for a long time."
Since emerging from its second bankruptcy in six years in January 2002, Washington Group has generated a solid balance sheet from a diversified project mix that now includes a contract to support the U.S. Central Command as Afghanistan and Iraq are being rebuilt following war. Washington Group President Stephen Hanks said it could be worth $100 million in the coming year.
Hanks also said the company had people in Oklahoma City on Friday talking with General Motors Corp. about rebuilding a sport utility production plant that was destroyed by a tornado Thursday evening.
The stock closed Friday up 13 cents a share on the Nasdaq at $19.70.
Washington, 68, bailed out one-time international construction and engineering giant Morrison Knudsen in 1996 as it was wallowing in bankruptcy following a series of poor decisions and began implementing a strategy of diversifying the project lines.
The Raytheon construction division was purchased in April 2000, and the company changed its name to Washington Group three months later in an attempt to show that the operation was under new leadership.
But the Raytheon deal went sour that fall when it turned out to carry about $2.5 billion in liabilities rather than the less than $1 billion anticipated.
A legal battle over the sale followed. But it drove the company back into bankruptcy, and the value of the stock went to zero for a second time. Washington held 38 percent of the outstanding shares.
The company restructured, erasing debt with shares in the new company while maintaining its project schedules and keeping customers and partners from fleeing.
In 2002, it generated
$3.7 billion in revenue, translating into earnings of $1.76 a share, and had $3 billion in backlogged projects.
"It was a very proud moment for us to be able to rebuild this company again," Hanks told shareholders.