British Parent Firm of Costain Homes Scotches Sale : Deal: The company’s former president and vice chairman, who were the would-be buyers, are no longer with the firm.

The British parent of Costain Homes Inc. said Thursday that a deal to sell the home-building concern is dead and that its president and vice chairman--the would-be buyers--have left the company.

Dale Dowers, the former president, said Thursday that Costain Group PLC scotched the deal to buy the company for $32 million, leaving him and former Costain Homes Vice Chairman Jeff Duggan in the lurch after they spent $1.1 million pursuing the deal.

Dowers and Duggan, a Briton, were then fired after taking a tough stance during the purchase negotiations, Dowers said. Company officials would only say that Dowers and Duggan left to pursue other business interests.

The company said it had promoted Julie B. Newcomb from vice president of sales and marketing to chief executive officer and hinted that she would be named president in a few months. Newcomb would be the first woman president of a publicly held home-building company, Costain said.

She would also be the third president at the Newport Beach company in less than four years. Newcomb came to Costain in 1988 from J.M. Peters Co. Inc., a Newport Beach-based builder of luxury homes, where she managed the company’s marketing.

The company’s first president, Jack M. Dangelo, said he was fired in 1989 in a dispute with the British parent over the way the medium-sized home builder was run.

The $3-billion British parent company has been selling assets to reduce a big debt. But it was already reconsidering its decision to sell the U.S. home-building business when the deal with Dowers hit some snags late last year, said Keith Egerton, a director and top company executive. The company decided not to sell, and Egerton intimated that Dowers and Duggan were having problems financing the deal.

Not so, says Dowers. The two had lined up an East Coast developer and a Canadian bank and set up a meeting to close the deal in November. But representatives of Costain Group didn’t show up for the meeting.

The reason, surmises Dowers, is something that occurred the day before the closing: That day the British construction concern Trafalgar House, which was threatening to take over Costain, sold its 8.6% stake in the company.

Suddenly, Costain’s urgent need to reduce its debt and bolster its share prices to thwart a takeover were gone, Dowers said.

At the same time, Costain was expected to report lower-than-anticipated profits for 1990, according to British stock analysts. The U.S. home-building company is carried on Costain’s books at a value of about $55 million, said Dowers, and Costain would have had to write off about $20 million for the sale. The write-off would have further weakened profits, Dowers said.

“It would have cut their profits in half,” Dowers said.

About two weeks later Duggan and Dowers were gone.

“They said it’d be too difficult to work with us in the future,” said Dowers, who is now looking for work. Duggan, who returned to England, could not be reached for comment. Duggan had been in charge of the U.S. home-building operation at the parent company’s headquarters in London and was considered the founder of the U.S. business, which he opened in 1987.

Egerton wouldn’t comment on Dowers’ version of the deal.

“We changed our mind,” he said Thursday. “And we came to the conclusion that it would be difficult for them to continue running the business.”

Costain is the latest of several big British home-building and construction concerns that have started building houses in Southern California’s housing market. That market is in one of its periodic slumps now but home builders expect it to eventually revive.

The British companies often hire American home builders familiar with the market to run their U.S. operations. Occasionally, the more free-wheeling Americans clash with the culture of the larger corporation and British business practices.

In the United States, Costain started out building inexpensive--for California--houses costing $185,000. It marketed them to first- and second-time buyers. It builds only in Riverside and San Bernardino counties, where land prices--and consequently home prices--are far lower than in coastal areas.

In 1989, the U.S. company sold 259 homes for $60 million. Last year, when the market went into a sharp slump, it sold only 168 homes for $31.5 million.

Dowers and Duggan were planning to expand into apartments and commercial buildings, Dowers said. Their goal was to generate income from rentals to tide the company over until the housing market picked up.

Costain, meanwhile, is going through a transition similar to one in the early 1980s, when its huge construction contracts in the Middle East began to dry up and the company was forced to seek new markets.

The company has found more work at home--it is one of the companies building the tunnel under the English Channel. But the home-building markets in England and Spain soured in 1988, even before the U.S. market. Costain also builds and manages commercial buildings, a market that is also slumping in Great Britain. So it is the company’s other major business--mining--that has been the bright spot recently.

Coal mining now accounts for more than half Costain’s operating profits, and indeed British financial services firm Hoare Govett Investment Research Ltd. says it expects the company to become increasingly reliant on the mining business.

Part of Costain’s big debt, in fact, comes from its acquisition in 1989 of the American mining firm Pyro.

“Mining is our protection from recession,” Egerton said.

Other than promoting Newcomb, the parent company has no plans to make major changes in its U.S. home-building business, Egerton says.