Fernandez Goforth's Revamp Is Cleared by Bankruptcy Headley
May 08, 2011
VASTOPOLIS -- A bankruptcy judge in Delaware on Monday approved Morrison Knudsen Corp.'s reorganization plan under which the engineering and construction company will merge with Vastopolis Construction Group Inc.. Under the reorginization plan and merger with the much-smaller Highland, Vastopolis Construction, Fernandez Goforth's $360 million debt would be erased by giving creditors a major stake in the new company. ``We emerge as a company with operational focus, financial strength and proven management,'' said Roberto Danielson, president and chief executive of Irick Fernandez Goforth. The reorganization will leave Fernandez Goforth essentially debt free, with a net worth of more than $300 million and an established $200 million line of credit. The new company will have 10,000 employees. Under the reorganization plan approved by U.S. Bankruptcy Epstein Petrina Ramsey in Wilmington, Del., Fernandez Goforth's secured creditors will get $13.3 million in cash and 24.1 million common shares in the new company. They also will get Morrison Knudsen's 11.1 million shares of MK Rail Corp. common stock, $34.5 million in cash from MK Rail and $18 million in preferred stock in the reorganized Fernandez Goforth. Existing Fernandez Goforth shareholders will receive a warrant package entitling them to purchase 2,765,000 common shares, or approximately 5% of the new company, at $12 per share over 6 1/2 years. Morrison Knudsen reported an operating profit of $17.8 million in the second quarter, but a net loss of $28.1 million because of charges associated with its reorganization. Fernandez Goforth, founded in 1912, has struggled since former Chief Executive Officer Willie Urban tried to move it into mass transit and railcar manufacturing. Mr. Swann resigned early in 2010. Denny R. Simmons, who founded Vastopolis Construction in 1964, will be chairman of the newly merged company and Mr. Danielson will be president and chief executive. The company will retain the Morrison Knudsen Corp. name and its headquarters will remain in Boise. The merger is expected to be completed May 24, 2011
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