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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: April 6, 1999
MORRISON KNUDSEN CORPORATION
Commission File Number 1-12054
A Delaware corporation
IRS Employer Identification No. 33-0565601
MORRISON KNUDSEN PLAZA, BOISE, IDAHO 83729
208/386-5000
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Item 2. Acquisition or Disposition of Assets.
GENERAL
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On March 22, 1999, the Corporation and British Nuclear Fuels, Ltd. ("BNFL")
acquired certain businesses (the "Westinghouse businesses") from CBS Corporation
(formerly known as Westinghouse Electric Corporation) pursuant to an Asset
Purchase Agreement dated as of June 25, 1998. The Westinghouse businesses
provide a wide range of products, services and technologies in the government
services and nuclear industries throughout the world.
The acquisition is valued at approximately $1,100,000,000, including
$200,000,000 in cash and assumption of approximately $900,000,000 in
liabilities. The Corporation's share, however, is approximately $121,000,000 in
cash, which was financed from borrowings under new revolving credit facilities
totaling $250,000,000. BNFL's share is approximately $79,000,000 in cash and the
assumption of approximately $900,000,000 in specified liabilities, commitments
and obligations relating to businesses not acquired by the Corporation. The
purchase price for the acquisition was determined through arms length
negotiations.
ACQUISITION FINANCING
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The Corporation financed its $121,000,000 portion of the purchase price under
its new credit facilities consisting of a $150,000,000 five-year facility which
provides for both revolving borrowings and the issuance of letters of credit,
and a $100,000,000 one-year facility which provides for revolving borrowings
which may be converted, at the Corporation's option, to a term loan having a
maturity of one year after the then current expiration of such facility. The
term of each facility may be extended annually for an additional year by mutual
agreement of the banks and the Corporation. The facilities' covenants require
the maintenance of financial ratios, and place limitations on guarantees, liens,
investments, dividends and other matters.
The facilities provide for interest on loans, payable quarterly, at the
applicable LIBOR rate or the base rate, as defined, plus an additional margin.
The additional margin ranges from 1.25% to 2.00% for the LIBOR rate and 0.25% to
1.00% for the base rate, based on the ratio of earnings before interest, taxes,
depreciation and amortization to the Corporation's funded debt. On March 19,
1999, the Corporation paid $3,700,000 in underwriting fees to the banks and is
required to pay annual and quarterly commitment and letter of credit fees.
The Corporation initially borrowed $75,000,000 under the one year facility and
$45,000,000 under the five year facility to finance the acquisition. The
remainder of the Corporation's share of the purchase price was funded from the
Corporation's existing cash.
BUSINESSES ACQUIRED
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Concurrent with the acquisition, the following two separate companies were
formed to acquire the operations of the Westinghouse businesses that were
acquired by the Corporation:
(1) Westinghouse Government Services Company LLC ("WGS"), a limited liability
company acquired the businesses that provide defense-related operations and
management services primarily for the U.S. Departments of Energy and Defense,
including the production of tritium for national weapons programs and high-level
waste solidification. These businesses employ over 11,200 employees. Included
in WGS is the Electro-Mechanical Division, which manufactures pumps and other
related products for the U.S. Navy and for the commercial nuclear industry. WGS
is wholly-owned by the Corporation. BNFL retains a 40% passive economic interest
in the profits and losses and cash flows of WGS.
(2) Westinghouse Government Environmental Services Company LLC ("WGES"), a
limited liability company acquired the businesses that provide non-defense
related governmental and environmental services, including environmental
remediation and waste management services. These businesses employ
approximately 2,500 employees. WGES is jointly owned by the Corporation (60%)
and BNFL (40%).
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The Corporation has management responsibility and control of WGS and WGES. The
property, plant and equipment acquired by the Company includes land, buildings,
machinery, equipment and construction in progress and the Corporation intends
generally to use such property, plant and equipment in the above described
businesses as they have previously been used.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired
Financial statements for the business acquired pursuant to the
Acquisition described in Item 2 of this Report will be filed by an
amendment hereto no later than June 7, 1999.
(b) Pro Forma Financial Information
Pro forma financial information giving effect to the transaction
described in Item 2 of this Report will be filed by an amendment
hereto no later than June 7, 1999.
(c) Exhibits.
10.1 Five-Year Credit Agreement dated as of March 19, 1999 among
the registrant, Bank of Montreal and NationsBanc Montgomery
Securities, Inc., Bank of America National Trust and Savings
Association and the Lenders which are or may becomes parties
thereto (filed as Exhibit 10.1 to the Corporation's Form
10-Q Quarterly Report for quarter ended February 26, 1999
and incorporated herein by reference).
10.2 364-Day Credit Agreement dated as of March 19, 1999 among
the registrant, Bank of Montreal and NationsBanc Montgomery
Securities, Inc., Bank of America National Trust (filed as
Exhibit 10.2 to the Corporation's Form 10-Q Quarterly Report
for quarter ended February 26, 1999 and incorporated herein
by reference).
Signature
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MORRISON KNUDSEN CORPORATION
/s/ Stephen G. Hanks
April 6, 1999 By: _________________________________________
Stephen G. Hanks
Executive Vice President,
Chief Legal Officer and Secretary
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