Following months of speculation about its financial stability and some hard-nosed negotiation with sureties and bankers, Cambridge, Mass.-based Modern Continental Construction Co. Inc announced Sept. 23 that it will merge with Jay Cashman Inc., Quincy, Mass., to form a new joint corporate entity effective within the next six months. The news was announced to Modern employees late in the day at a meeting in Medford, Mass.
The new corporate structure, as yet to be determined and named, joins two well-known regional firms that will immediately pursue future jobs in the New York City and New England areas. "The combination of Moderns heavy civil construction and our expertise in marine construction will create a company with unparalleled capabilities across a spectrum of construction specialty areas," says Chairman Jay Cashman in a statement.
The move also will help finance completion of Moderns remaining work on Bostons $14.6-billion Central Artery/Tunnel project. Modern currently is laboring on five contracts totaling an estimated $400 million. The jobs are between 50% to 80% complete and must be finished by mid-2005 when CA/T wraps up. An industry source says that Moderns surety, Travelers Property Casualty Corp., has been managing Moderns cash flow and that the contracts would remain with Modern. Cashman also is bonded by and working with Travelers. "I have met with Moderns bonding company and I fully expect a smooth transition," says Matthew J. Amorello, chairman of the Massachusetts Turnpike Authority, which manages CA/T. "Both Modern and Cashman have done extensive work on the CA/T and we are confident this change will have no impact as we work towards completion."
There had been industry speculation that Modern was on the ropes financially as CA/T began winding down construction last year. Modern had won over $3 billion in CA/T contracts during the project's 10-year construction heyday and had attempted to expand into new regional markets in the Southeast and West Coast, but had mixed results that crimped its cash flow (ENR 8/2 p. 12). The firm, which is ranked 42nd among ENR's Top 400 contractors, was actively pursuing financial and organizational options when it was approached by Cashman six months ago.
Modern was founded in 1967 by Lelio "Les" Marino, an Italian immigrant, and currently has about an 18-month, $700-million backlog. According to Modern President John H. Pastore, the firm was shooting for an annual volume of $250 million by 2006. Cashman is a 30-year old privately held firm with a large dredging fleet. It posts annual revenue between $125 million to $200 million and has a $350-million backlog. The firm was known as J.M. Cashman until 1994.
Modern has had an established, but competitive, working relationship with Cashman because both firms worked on CA/T projects, frequently on neighboring segments. "Jay has been a respected competitor for many years," says Marino. "Together, our companies will create a new model for the construction industry."
Sources believe that Dale H. Pyatt, Cashman president and CEO will lead the new firm while Pastore manages the Modern transition. "The goal of both companies is to successfully merge and transition everyone over to the new entity," says Pyatt.