Court Approves Washington Group Motion Rejecting RE&C Stock Purchase Agreement; Financial Restructuring on Track.

Business Editors

BOISE, Idaho--(BUSINESS WIRE)--Sept. 6, 2001

Washington Group International, Inc. announced today that the company has received Court approval in Reno authorizing Washington to reject the Stock Purchase Agreement related to Washington Group's July 7, 2000 acquisition from Raytheon Company of Raytheon Engineers & Constructors (RE&C).

"Our financial restructuring is on track," said Stephen G. Hanks, Washington Group President and Chief Executive Officer. "We have reformed every problem RE&C contract to cash neutral or positive, paid our critical vendors, continue to perform on projects and have generated $50 million in cash, even with the extraordinary expenses associated with a Chapter 11 filing.

In the motion approved today, Washington Group asserted that Raytheon materially breached the Stock Purchase Agreement and fraudulently induced Washington Group to purchase RE&C.

"Today's action ensures that we won't be encumbered in the future with the possible liabilities arising out of the Stock Purchase Agreement. We are putting the Raytheon problems behind us and directing our focus on what we do best -- serving our clients. It's simply not in the best interest of our company to be burdened by the rejected obligations to Raytheon," said Mr. Hanks.

Raytheon has guaranteed the performance of certain of the RE&C project agreements acquired by Washington Group when it purchased the stock of certain of Raytheon's subsidiaries, either through parent guarantees, letters of credit, or performance bonds. Under the Stock Purchase Agreement, Washington Group continued to perform on those projects and in some circumstances, agreed to reimburse Raytheon for payments made by Raytheon in satisfaction of Raytheon's liability on these projects.

Raytheon now claims that Washington Group may be liable for almost one billion dollars for Raytheon's performance on several large RE&C projects. By rejecting the Stock Purchase Agreement, Raytheon's claims, if any, arising out of that agreement will be deemed, at best, prepetition unsecured claims.

Washington Group International, Inc., is a leading international engineering and construction firm. With more than 30,000 employees at work in 43 states and more than 35 countries, the company offers a full life-cycle of services as a preferred provider of premier science, engineering, construction, program management, and development in 14 major markets.

Markets Served

Energy, environmental, government, heavy-civil, industrial, mining, nuclear-services, operations and maintenance, petroleum and chemicals, process, pulp and paper, telecommunications, transportation, and water-resources.

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are identified by the use of forward-looking terminology such as may, will, could, should, expect, anticipate, intend, plan, estimate, or continue or the negative thereof or other variations thereof. These include, among others, statements with respect to the terms of the plan of reorganization and the structure of the reorganized company. Forward-looking statements are necessarily based on various assumptions and estimates and are inherently subject to various risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying assumptions and estimates, the involvement of Washington Group's creditors and equity holders in the Chapter 11 proceeding, bankruptcy court approvals incident to Washington Group's operations in Chapter 11 and the ultimate reorganization of Washington Group, and possible changes or developments in social, economic, business industry, market, legal, and regulatory circumstances and conditions and other actions taken or omitted to be taken by third parties, including the corporation's customers, suppliers, business partners, and competitors and legislative, regulatory, judicial, and other governmental authorities and officials.