L-3 Communications Holdings
Inc., maker of flight displays for the U-2 spy plane, wants a $100
million refund on its $1.2 billion purchase of a Raytheon Co. unit
to cover cost overruns at the business.
L-3’s audit of the Aircraft Integration Systems it bought a
year ago found $86 million in extra costs to complete contracts
because of circumstances that arose before the acquisition, L-3
said in its annual Securities and Exchange Commission filing.
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This is the third time in three years Raytheon has been
accused by buyers of hiding costs at units it sold for a combined
$1.9 billion, including the acquisition of another unit by L-3,
and a case involving Washington Group International Inc.,
according to Bloomberg data. Raytheon spokesman Jim Fetig said the
company disputes L-3’s latest claims.
“We expect no material adjustment,” in the sale price of
the unit, Fetig said.
The cost overruns account for the “most significant
adjustments to the initial purchase price,” L-3 said in the
filing. The majority of those costs were related to a contract
from the Royal Australian Air Force in 1994 for upgraded equipment
on 18 P-3C aircraft, L-3 said.
L-3 submitted its proposed price adjustment to Raytheon under
the terms of the purchase agreement, and hopes to resolve the
dispute this year, L-3 said. The audit was completed in the fourth
quarter.
Bloomberg News
