CH2M Hill Wins Prize in Bankruptcy Contest

The crown jewel of J. A. Jones Inc. assets left in limbo after the construction firm's Sept. 26 bankruptcy has been sold for $95.5 million. Lockwood Greene, its well-regarded engineering unit, is now a wholly owned subsidiary of industry giant CH2M Hill Cos. after a whirlwind auction frenzy that lasted into the wee hours of Dec. 9 and ratcheted up the sale price from an initial $75 million.

Denver-based CH2M Hill's persistence and willingness to pay cash clinched the deal, sources say. "The cleaner the deal, the more favorably it was viewed," said one source close to the proceedings. With financial backing from Bank of America, CH2M Hill eventually outlasted Balfour Beatty Inc., the U.S. arm of the British contractor, beating its last bid for the Spartanburg, S.C.-based engineer by $500,000.

Germany's Bilfinger Berger AG, Mannheim, which launched sale proceedings in late October by agreeing to act as the "stalking horse" with a $75-million bid, dropped out last month because of disagreement over terms and conditions, said Carlos Möller, BB international director. The firm still will receive a nearly $1.5-million stalking horse fee.

Lockwood Greene President and CEO Fred Brune said there were at least 30 "interested companies" at one point, but they did not make formal bids and he did not disclose names. "The bid process narrowed the field to those who were most motivated," he said.

CH2M Hill was eager to pick up Lockwood Greene to add significant private-sector design capability and balance a portfolio that has tilted to government, said Chairman and CEO Ralph Peterson. Lockwood Greene, with $600 million in revenue and 2,500 employees, specializes in chemical, biotech, pharmaceutical, power and manufacturing markets. Biotech and food and beverage were among key growth markets targeted by CH2M Hill. "We have a fledgling business in those," said Peterson. "They have a real one." The deal now gives CH2M Hill a 40 percent private-sector market share and boosts revenue of the combined company to more than $3 billion.

CH2M Hill initially bid $76 million, replacing BB as stalking horse. "It was a very peculiar procedure but certainly legal," said Möller. "CH2M Hill thought it was in the driver's seat" until Balfour Beatty put in its $95-million offer, said one source close to the proceedings. "But it got too rich for them."

Some observers believe the price would have been lower in a negotiated acquisition. Others say CH2M Hill did well, based on the price-to-revenue comparison. "This was less than half of the low end of other deals," said Paul Zofnass, president of EFCG Inc., New York. "It looks like CH2M Hill got an awfully good buy."

The final price may please J.A. Jones creditors, but it may still be a drop in the bucket for sureties, lenders and others still owed hundreds of millions of dollars by the bankrupt contractor. "They have tremendous leverage in court because they have been the most wounded in the process," said one veteran of a bankrupt industry firm.

The deal absolves CH2M Hill of most of the new unit's liabilities but it has agreed to pay employee vacation, which could cost it more than $4 million, said one executive involved in the proceedings. Also at issue are ownership stakes of Lockwood Greene employees, particularly managers, that appear to be "wiped out," said one source. Peterson could not confirm that, but indicated executives could have ownership opportunities for more highly valued CH2M Hill stock under "retention agreements." CH2M Hill stock has risen in value from $8.40 per share in late 2000 to $11.88 as of Nov. 7, according to federal filings. Peterson said there will be no layoffs. "In fact, we anticipate it will go the other way," said Peterson. "This is not about cost cutting, it's about growth."

Even with remaining uncertainties, Lockwood Greene employees are relieved to be rid of financial "encumbrances" that date back to its forced merger with J.A. Jones by their now-insolvent former parent, German contractor Philipp Holzmann AG. "A huge albatross just fell to the ground," said one manager. Source: Engineering News-Record. By Debra K. Rubin, Mary Buckner Powers and Peter Reina

SCDOT Receives National Safety Award

The South Carolina Department of Transportation has received a National Highway Safety Award for installing cable barriers and using other practices to reduce interstate fatalities by nearly one-third.

SCDOT is one of six state transportation departments that received National Highway Safety Awards from the Federal Highway Administration and the Roadway Safety Foundation.

According to RSF Executive Director Diane Steed, "This year's award winners have demonstrated a commitment to saving lives and making a difference." The award ceremony honors initiatives that save lives by improving roadway design, operations and overall planning.

SCDOT won "for its outstanding safety practices program. Four significant interstate safety initiatives were undertaken to reduce fatal cross-over crashes: installation of 315 miles of cable barriers, speed limit reduction in urban areas, truck lane restrictions, and interchange ramp upgrades." Interstate fatalities were reduced by 31 percent, saving an estimated 148 lives in 2 years.

Carolinas ABC Presents Excellence Awards

The Associated Builders and Contractors of the Carolinas recently presented its Excellence in Construction Awards and Craft Professional of the Year awards.

Bovis Lend Lease and Rodgers Builders, both of Charlotte and Miller & Long of Raleigh, N.C., were awarded the highest honor, the "Award of Excellence." Bovis Lend Lease was awarded this award for its addition to the Brenner Children's Hospital at Wake Forest University Medical Center.

Rodgers Builders won this award for its Union Regional Medical Center Outpatient Treatment Pavilion and Hospital Expansion project. Miller and Long was recognized for its Duke University Parking Garage project.

Juba Aluminum of Concord, N.C., and David Allen Co. of Raleigh, won "Awards of Merit" for the Cisco Site 12 project and the construction of the David Allen Company corporate headquarters, respectively. Brasfield and Gorrie, Raleigh, won "Honorable Mention" for its Lenoir Memorial Hospital and Rex Cary Medical Office Building projects.

ABCC recognized Antonio Senerchia of Valley Crest Landscape Development with its highest individual award, the "Craft Professional of the Year."