USA • FINANCIAL Engineering and consultancy company Stone & Webster is to be sold to Jacobs Engineering Group in a deal worth some $200 million.

The shock sale announcement came amid increasing cash-flow problems and the recent discovery of a major cost over-run on an unidentified project. Losing out on a contract to clean up a nuclear power plant dealt another blow to the company that was forced to revise its 1999 results. The company plans to file under Chapter 11 of the US bankruptcy code following the signing of the agreement.

In order to resolve its immediate and chronic cash-flow problems, Stone & Webster has agreed to accept a $50 million revolving credit facility from Jacobs as part of the sale, which is expected to cost around $150 million in cash and stock.

The over-run on project costs, reputedly the Tiverton gas-fired plant on Rhode Island, is one of a number of problems that the company has faced over recent years. A failed three-year programme to turn its finances around through asset divestment and a move away from nuclear engineering into gas-fired and other energy businesses, now leaves Jacobs in command.

Stone & Webster had forecast improved results this year after recording a net return in 1999 of $20.5 million, up from a nearly $50 million loss on the year before, although this was largely the result of returns on sales of assets such as its Boston property complex. However, following the announcement that the company is faced with insolvency, Maine Yankee nuclear station said that it had terminated a 1998 contract with the group, worth some $250 million. The contract to decommission the site and build a storage facility for used nuclear fuel is 25 per cent complete and was due to finish in 2004. Closed in 1997, Maine Yankee is majority owned by CMP Group, Northeast Utilities and National Power. While considering its options for completion of the decommissioning, Maine Yankee has extended the contract through to the end of June. But, with the impression that the group has been thrown off the decommissioning job, others will be assessing their own arrangements with the company, although Stone & Webster has been quick to reassure its clients that any existing contracts will be completed.

The sale to Jacobs is expected to conclude in September.