KBR, an oil services contractor, is the subject of several government investigations into billing and accounting practices linked to its war-related contracts.
Halliburton, whose former chairman and chief executive is U.S. Vice President Dick Cheney, does not intend to retain any investment in KBR stock following the offering, according to the filing, made with the U.S, Securities and Exchange Commission.
KBR plans to use proceeds from the offering to repay debt owed to Halliburton Energy Services Inc., another subsidiary of the Texas-based energy services conglomerate, and for other general corporate purposes, the filing said.
The filing did not include expected share price, the number of shares to be offered or the underwriters.
KBR, once known as Kellogg Brown & Root, earned $240 million on revenue of $10.1 billion in 2005 after losing $303 million on revenue of $11.9 billion in 2004, according to the prospectus.
The swing from loss to profit came as KBR's cost of services as a percentage of revenue dropped from 102 percent to 96 percent between 2004 and 2005, financial statements included in the prospectus showed.
Last month, the government disallowed $51 million KBR claimed on a contract for housing U.S. soldiers in Iraq. In a similar review, officials disallowed a $12 million KBR claim for laundry services in Iraq. The company said it was working to resolve the two matters.
As of December 31, 2005, KBR also had unapproved claims totaling $69 million on U.S. government contracts related to reconstruction of Iraqi oil fields, the filing said. KBR's costs have exceeded the customer's funded value of the task order, it said.
The company warned investors that they should expect the company to have continued disagreements with U.S. officials.
Given the demands of working in Iraq and elsewhere for the United States government, we expect that from time to time we will have disagreements or experience performance issues with the various government customers for which we work, the filing said.
Additionally, U.S. military officials may investigate concerns about the quality of water provided to U.S. troops in Ramadi, Iraq, in 2004 and 2005, the filing said.
U.S. Senate Democrats raised issues about Ramadi's water after former KBR employees claimed that it was foul, untreated, and 2x the normal contamination of untreated water from the Euphrates River, according to one employee e-mail released at a January hearing.
The company believes that all potable and non-potable water currently produced by KBR for Ar Ramadi is filtered to remove contaminants, bacteria and viruses and is chemically disinfected with chlorine, according to the prospectus.
KBR said it plans to apply for a New York Stock Exchange listing under the symbol KBR