Fluor Corp.'s board of directors has approved a plan to spin off a company, resulting in the creation of two publicly held companies, Fluor Corp. and Massey Energy Co., the company reported Thursday. Fluor Corp. will focus on engineering and construction, while Massey will focus on coal mining.
Fluor shareholders at the time of the spinoff will retain their existing Fluor stock, which will become Massey Energy shares, and will also be issued one share in new Fluor stock through a tax-free distribution. The old Fluor's name will be changed to Massey Energy Co. The proposed transaction, set for completion within 6 months, is subject to shareholder approval, establishment of new capital structures, and a favorable ruling by the Internal Revenue Service.
"The proposed transaction creates two separate companies, each a leader in its respective field, with strong opportunities for future growth and expansion,'' said Fluor Chairman and CEO Philip Carroll. "We believe this transaction will enable the respective management teams to focus more closely on their businesses and provide the flexibility for each company to grow in a way best suited for its industry."
Carroll added the company also believes the spinoff will allow investors to evaluate the financial performance of each company independently and create meaningful value for present Fluor shareholders.
"The proposed spinoff will allow Massey to keep a singular focus on our goal of being the premier US coal company,'' said Donald Blankenship, Massey's chairman, president and chief executive officer. "As an independent company, we will be better able to offer incentives to management and employees, maintain the flexibility to grow our business, and be nimble enough to take advantage of opportunities resulting from a potential industry consolidation.''
Under terms of the proposed spinoff, Massey is expected to have a debt-to-total capitalization ratio of less than 50%. The company expects to secure an investment-grade rating.
The new Fluor Corp. also is expected to maintain a conservative statement of financial condition designed to preserve its A debt rating, the company said. Any excess cash resulting from the transaction will be utilized to fund new business initiatives.
For the fiscal year ended Oct. 31, 1999, A.T. Massey reported assets of $2 billion with operating profit of $147 million on revenues of $1.1 billion. Overall, for the same period, Fluor Corp. reported assets of $4.5 billion with operating profits of $399 million (excluding a special provision) on revenues of $12.4 billion.
Upon completion of the transaction, Fluor Corp. will be comprised of three strategic business units�Fluor Daniel, Fluor Global Services, and Fluor Signature Services�all headquartered in Aliso Viejo, Ca. Massey Energy Co. will be headquartered in Richmond, Va., its current home.
