Foster Wheeler obtains waiver extension, discloses more cost overruns

New York, April 12 - Foster Wheeler Ltd. said it obtained an extension of the waiver on its current credit facility and added that talks are continuing with its current bank lenders on a revision of the agreement.

The Hamilton, Bermuda company said that progress on the new credit facility had been delayed by the discovery of further cost overruns.

On Jan. 29, Foster Wheeler announced 2001 results that included after-tax charges of $101.5 million in the fourth quarter.

In a 10-K filing with the Securities and Exchange Commission Friday, the company raised that figure by $29.9 million after tax. The charge is made up of $23.4 million in additional project cost overruns and $6.5 million in overdue accounts receivable.

Foster Wheeler said the revised charges do not affect its cash position of $224 million in cash and cash equivalents at the end of the fourth quarter of 2001. At the close of the first quarter on March 29, 2002, the cash position was $423 million.

The latest cost overruns are within the same group of seven projects cited in the previous announcement. Work on six of the seven has been substantially completed, the company said.

"I am extremely disappointed in the performance of this business unit," said Raymond J. Milchovich, the company's chairman, president and chief executive officer, in a news release. "I can assure you that actions have and will continue to be taken to address the performance of this business unit. The timing of these developments has also delayed our progress on a new credit facility which, given the positive momentum that we had built with our lenders, is unfortunate."

The latest waiver extension on the company's revolving credit facility is through April 30, 2002.

It is subject to ongoing conditions, including the forbearance of remedies by lenders on its lease financing facility and an extension of its receivables sale arrangement. Foster Wheeler said it received a forbearance on the lease financing facility through April 30 and an extension of its receivables sale arrangement through April 29, 2002.

Because of the continuing discussions with its bank group, Foster Wheeler said its auditors included a statement about the company's ability to continue as a going concern.

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