TCR_Public/960625.MBX BANKRUPTCY CREDITORS' SERVICE, INC.


Bankruptcy News For:  June 25, 1996



  1. MK RAIL ANNOUNCES AGREEMENT TO REPURCHASE DEBT
  2. LEOMINSTER MAN PLEADS GUILTY TO BANKRUPTCY FRAUD
  3. MORRISON KNUDSEN CORPORATION FILES PLAN OF REORGANIZATION





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MK RAIL ANNOUNCES AGREEMENT TO REPURCHASE DEBT


  
            PITTSBURGH, PA - June 25,, 1996 - MK Rail Corporation (Nasdaq:
        MKRL) today announced that it has signed a definitive agreement to
        repurchase the debt that the company owes to Morrison Knudsen
        Corporation
(NYSE: MRN).
        


            Under the agreement, MK Rail is to repurchase the debt, which
        has an outstanding balance of $56.2 million including accrued
        interest, for a total of $34.5 million.  MK Rail plans to finance
        the transaction with the proceeds from previously announced asset
        sales, cash from operations, and proceeds from other borrowings or
        non-essential asset sales.
        


            "This debt repurchase represents the final and most important
        element in MK Rail's restructuring and turnaround, and it positions
        the company for future growth," said John C. (Jack) Pope, MK Rail's
        chairman.  "At the beginning of 1996, we established a goal of
        significantly lowering the amount of debt on MK Rail's balance
        sheet, which then stood at about $120 million.  Through this debt
        repurchase and our improved operating results, we expect to reduce
        debt to about $65 million."
        


            The debt repurchase, which is subject to certain conditions, is
        expected to be completed during the third quarter, in conjunction
        with Morrison Knudsen's emergence from bankruptcy.
        


            As part of its bankruptcy filing, Morrison Knudsen expects to
        distribute its 63 percent of MK Rail stock to its creditors.  MK
        Rail has agreed to provide registration rights to these creditors,
        and Morrison Knudsen has agreed that this stock will be subject to
        standstill and voting provisions, which generally prohibit the
        solicitation of proxies, initiation or inducement of tender offers
        and other efforts to influence or control the management or policies
        of MK Rail.  The voting provisions require that for a specified
        period, during which a majority of MK Rail's Board of Directors
        consists of independent directors, this stock will be voted in favor
        of MK Rail's nominees to its board.  This period will end on the
        earlier of the date two years after Morrison Knudsen distributes the
        stock, or the date that stock subject to the standstill and voting
        provisions represents less than 15 percent of MK Rail's outstanding
        common stock.  Also, this stock is subject to transfer restrictions
        under which transferees, other than those receiving stock in certain
        registered offerings, must agree to be bound to these provisions.
        


            MK Rail has also amended its Stockholders Rights Plan.  As a
        result of the amendment, the rights will be exercisable and will
        trade separately from the company's common stock if a person or
        group of persons becomes the beneficial owner of 15 percent or more
        of the company's common stock (rather than 10 percent or more, as
        was previously provided), or if a person commences a tender offer or
        exchange offer, the consummation of which would result in such
        person being the beneficial owner of 15 percent or more of the
        common stock (rather than 10 percent or more, as was previously
        provided).  The amendment also provides that a merger of Morrison
        Knudsen will not constitute a "change of control event" as defined
        in the plan, provided certain conditions are satisfied including
        prompt distribution of the MK Rail stock.
        


            MK Rail is a leader in the manufacturing and distribution of
        locomotive components; provides locomotive fleet maintenance and
        overhauls; and manufactures switcher locomotives.
        


CONTACT:  Tim Wesley of MK Rail, 412-237-2250, ext. 161



LEOMINSTER MAN PLEADS GUILTY TO BANKRUPTCY FRAUD, U.S. ATTORNEY ANNOUNCES


        


            WORCESTER, Mass., June 25, 1996 - A Leominster man
        pleaded guilty today to three counts of bankruptcy fraud for
        concealing assets and making false statements in his bankruptcy.
        


            United States Attorney Donald K. Stern stated that DAVID M.
        FLANAGAN, 41, of 640 Central Street, Leominster, Massachusetts,
        pleaded guilty today to concealing from his bankruptcy creditors and
        the bankruptcy trustee his ownership in the property he lived in.
        In addition, FLANAGAN pleaded guilty to making a false statement by
        claiming to pay rent for living at that same address, and also for
        making a false statement denying that he was an officer and director
        of a company called Corporate Realty, Inc., which owned an apartment
        building with commercial space located at 100-104 Daniels Street,
        Fitchburg, Massachusetts.
        


            At a hearing before United States District Judge Nathaniel M.
        Gorton in Worcester, a prosecutor stated that FLANAGAN had received
        the deed for the Leominster property nearly two years before filing
        for bankruptcy, but did not record the deed at the Registry of
        Deeds.  The prosecutor advised the Court that one month before
        filing for bankruptcy, FLANAGAN arranged to list the property for
        sale with a real estate broker.  FLANAGAN did not sell the property,
        but failed to list it in his bankruptcy schedules when he filed, and
        denied owning the property at a meeting of creditors.  FLANAGAN
        recorded the deed about a year after his bankruptcy was closed, at
        the same time he conveyed a part of the land to his girlfriend.
        


            FLANAGAN faces a maximum penalty of five years' imprisonment and
        a $250,000 fine on each count.  Judge Gorton scheduled his
        sentencing for September 4, 1996.
        


            The case was investigated by agents of the Federal Bureau of
        Investigation, was referred by the U.S. Trustee's Office in Boston
        and Worcester, and is being prosecuted by Assistant U.S. Attorney
        Mark J. Balthazard of Stern's Economic Crimes Unit.
        


        CONTACT: Joy Fallon or Anne-Marie Kent of the U.S. Attorney's
        Office, 617-223-9445



MORRISON KNUDSEN CORPORATION, A DELAWARE HOLDING COMPANY, FILES PLAN OF REORGANIZATION


        


BOISE, Idaho, June 25, 1996 -- Morrison Knudsen
        Corporation
(NYSE: MRN), a Delaware holding company, announced today
        that as planned, the company has filed its plan of reorganization
        under Chapter 11 in the United States Bankruptcy Court for the
        District of Delaware. The plan of reorganization pertains only to
        the corporate parent company and does not involve MK's operating
        companies, Morrison Knudsen Corporation of Ohio and National
        Projects, Inc., or any of their engineering, construction,
        environmental and mining subsidiaries.  MK's plan of reorganization
        was approved by MK's secured creditors and provides for, among other
        things, the merger of Morrison Knudsen with Washington Construction
        Group, Inc. and an exchange of MK's existing secured debt for new
        equity in the combined company.
        


            "Our prepackaged reorganization provides an excellent vehicle
        for relieving the parent corporation of its debt and enabling our
        operations, which are strong and healthy, to be even more
        competitive in the marketplace," said Robert A. Tinstman, MK's
        President and Chief Executive Officer. "The financial restructuring
        at the corporate parent level does not involve our operating
        companies. With strong core operations and a $60 million working
        capital facility in place, MK will continue to honor all contract
        commitments and obligations to clients, joint venture partners,
        subcontractors and suppliers and pay employees on time and in full."
        


            Morrison Knudsen of Delaware filed its voluntary petition for
        reorganization in Wilmington, Delaware and received approval of
        first day motions which ensure that the company can continue in the
        ordinary course of business. The corporation's plan of
        reorganization is expected to be consummated by September 30, 1996,
        subject to possible modification and the satisfaction of certain
        conditions, and would result in an essentially debt-free company
        with a strong balance sheet and substantial bonding capacity.
        


            Morrison Knudsen's operating groups serve the world's
        environmental, heavy civil, industrial, mining, operations &
        maintenance, power, process and transportation markets as an
        engineer and constructor.
        


        CONTACT:  Brent Brandon, Vice President of Corporate Communications
        of Morrison Knudsen, 208-386-6612