BOSTON (AP) — Raytheon Co. will reassume management of two power plant construction projects where work was halted a week ago due to a dispute with Washington Group International.
Boise-based WGI took over construction of the gas-fired power plant projects in Everett and Weymouth last year when it purchased Raytheon's construction and engineering division. But the two companies have been fighting bitterly over a purchase price adjustment, and last week WGI suspended work on the projects in a bid to stave off bankruptcy.
Raytheon retained liability for completing the plants for Sithe Electric and other projects if WGI were unable to do so. On Thursday, the New York Supreme Court in Manhattan, the trial court for the state, ordered New York-based Sithe to terminate its contract with WGI, Sithe said, clearing the way for Raytheon to take over.
Sithe said it initiated a court hearing to clarify its contract with Raytheon.
"We have been working very hard during the past week to resolve this situation as quickly as possible," William Kriegel, chairman and chief executive officer of Sithe, said in a news release. "We are extremely pleased that the local union work force will be back at work by no later than next Monday and construction of our two power generating facilities will resume with little interruption."
Raytheon officials said in a conference call last week they were preparing to take over the project if necessary, and spokesman David Polk said Thursday night that Raytheon would head to the sites Monday morning to evaluate their status.
"We've said all along we would have guarantees for those projects, and now the way has been cleared," he said.
Raytheon has said it estimates its potential liability on a series of projects it retained responsibility for after the sale to Washington Group could be as high as $450 million. WGI has essentially said it would cost it $380 million to complete those two projects on its own.
Polk said it is too early to estimate what Raytheon's exposure on the projects could be.
Sithe said it still expects both facilities will open by spring 2002.