BOISE (AP) — Washington Group International has drastically reduced chairman Dennis Washington's stake in the reorganized company that would emerge from bankruptcy.
And it has indicated it is prepared to let the Montana billionaire step aside completely if his stock-option deal threatens approval of the bankruptcy plan.
Washington Group filed for Chapter 11 protection on May 14. It says Raytheon misled it about the value of a construction division it sold to Washington Group, causing its financial straits.
The company filed an amended plan in U.S. Bankruptcy Court in Reno last week, outlining a new way of dividing assets of the worldwide engineering and construction company. It is intended to improve the chances of approval for the Boise-based corporation's bankruptcy plan.
One potential roadblock was an agreement that would have let Dennis Washington buy up to 40 percent of the reorganized company's stock and stay on as chairman for at least two years.
The company's creditors had earlier charged that pact was unfair and potentially illegal. Another part of that agreement included him staying on as chairman for another two years.
"The Washington agreement was negotiated with a management that is dominated by Mr. Washington and, in essence, permits him to buy back his interest in the company on very favorable terms, a privilege that is granted to no other holder of equity and to no other person," the creditors' committee said in court documents.
That panel said Friday it would continue to oppose the reorganization plan, despite the offer to take Washington's deal off the table.
The revised plan includes a clause that says if Washington's new stock-option deal is an impediment, it will be stricken.
It also reduces Washington's stock options from the original 15 percent to 14 percent. It makes no mention of a deal in the previous plan that would have allowed Washington to buy up to an additional 25 percent of common stock in the new company.
In court documents filed in June, the company warned Washington might resign if not allowed to buy a major stake in the reorganized concern.
On Friday, company officials characterized Washington as a "true leader" willing to step aside, if needed, for the better health of the concern.
The plan's conformation hearing is set for Sept. 13-14 and Oct. 10-11.