Fluor Announces Plans for Spin-Off That Will Create Two New Public Companies

Category:

Thursday, June 8, 2000 8:08 am EDT

Dateline:

ALISO VIEJO, Calif.

Public Company Information:

NYSE:
FLR
"debt rating, which is an indicator of the company's long-term strength and solid financial footing. Any excess cash resulting from the transaction will be utilized to fund new business initiatives."

Fluor Corporation (NYSE:FLR) today announced that its board of directors has approved a spin-off, resulting in the creation of two publicly held companies -- a "new" Fluor Corporation and Massey Energy Company.

Fluor shareholders at the time of the spin-off 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 Company. The proposed transaction, which is expected to be completed within six 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's Philip Carroll, chairman and chief executive officer. "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.

"We also believe that the spin-off will allow investors to evaluate the financial performance of each company independently and create meaningful value for present Fluor shareholders," Carroll added.

"The proposed spin-off will allow Massey to keep a singular focus on our goal of being the premier U.S. coal company," said Massey's Donald Blankenship, 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."

Each of the new companies will have a conservative capital structure relative to its specific industries, permitting efficient access to capital required to fund future growth. Under terms of the proposed spin-off, Massey is expected to have a debt to total capitalization ratio of less than 50 percent, conservative by the standards of the mining industry. The company expects to secure an investment-grade rating.

The new Fluor Corporation also is expected to maintain a conservative statement of financial condition designed to preserve its "A" debt rating, which is an indicator of the company's long-term strength and solid financial footing. Any excess cash resulting from the transaction will be utilized to fund new business initiatives.

"Both companies, each with significantly different financial characteristics and strategic opportunities, will benefit from the timing of today's announcement," said Ralph F. Hake, executive vice president and chief financial officer. "Each will be positioned to capitalize on growth opportunities -- opportunities that may not have been optimal for either Fluor or Massey if they remained one company. This move brightens everyone's future by allowing each enterprise to focus on its industry and marketplace environments to drive value creation."

For the fiscal year ended Oct. 31, 1999, A.T. Massey reported assets of $2 billion with an operating profit of $147 million on revenues of $1.1 billion. Overall, for the same period, Fluor Corporation 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 Corporation will be comprised of three strategic business units -- Fluor Daniel, Fluor Global Services, and Fluor Signature Services, all headquartered in Aliso Viejo, California. Massey Energy Company will be headquartered in Richmond, Virginia, its current base of operations.

Note On Forward-looking Statements:

Statements and press releases regarding the implementation of a proposed transaction resulting in the creation of two publicly-held companies, the benefits expected to be realized by such a transaction, the anticipated impacts of such a transaction, growth opportunities and potential share repurchases, are forward-looking in nature. Such forward-looking statements reflect current analysis of existing information.

Caution must be exercised in relying on forwarding-looking statements. Due to known and unknown risks, actual results may differ materially from expectations. Factors potentially contributing to such differences include, among others:

-- Inability to consummate the transaction for any reason, including,

failure to obtain adequate assurances as to favorable tax

treatment, inability to establish new capital structures or

inability to obtain share holder approval.

-- Consummation of the transaction and realization of the anticipated

results could take longer than expected;

-- Each of the companies may fail to receive the credit rating

anticipated

-- Credit and other sources of funding necessary for the consummation

of the transaction may be less available than expected;

-- Implementation difficulties and market factors could alter the

proposed strategies and goals of each of the companies; and

-- Each of the companies could face difficulties in locating and/or

achieving anticipated consolidation, growth, expansion and new

business initiatives and opportunities.

Additional information concerning factors that may influence Fluor Corporation's results can be found in its press releases as well as its periodic filings with the Securities and Exchange Commission. In this regard, risk factors are specifically discussed under the heading "Item I. Business -- Other Matters -- Company Business Risks" in Fluor Corporation's Annual Report on Form 10-K for its 1999 fiscal year. Such filings are available publicly and upon request from Fluor Corporation's Investor Relations Department: 949/349-3909. Fluor Corporation disclaims any intent or obligation to update its forward-looking statements.

Fluor Corporation releases are available on Fluor's Corporate News on the Net site at http://www.businesswire.com/cnn/flr.htm.

Contact:

Fluor Corporation
Keith Karpe, 949/349-7661
or
Lori Serrato, 949/349-7420

   

Newsroom Inquiries
media.relations@fluor.com

@FluorCorp

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