Washington Group's levels made a slight recovery last week with a trade into the 65-67 range from the low 60s. The size of the piece could not be ascertained. Dealers emphasize that the company's legal snare over Raytheon Construction & Engineering is still real, but say things aren't all bad. "If they're able to neutralize their problems with Raytheon, things should be looking up for them," said a trader. "If you look at the future business, there are tons of power plants that need to be built. It's the legal situation that's still bad." Another market watcher remarked that the company's ability to secure interim financing is the real issue to watch. "The company melts down if the banks don't supply the credit," he said. Last Wednesday the company secured debtor-in-possession financing, said a spokeswoman.
Once considered a par name, the credit landed in the 60s after the company's legal battle with Raytheon was publicized. Washington Group, formerly known as Morrison-Knudsen, acquired Raytheon Engineering/Construction and Westinghouse Engineering Business. A Washington Group spokesman said Raytheon was not forthcoming about the extent of its liability when the construction and engineering arm was acquired. While its deal was done last July, Washington Group made the market's collective jaw drop when it announced last March that it was at risk of violating its covenants.