Fluor Expects Net to Rise as Result of Office Repurchase

Fluor Corp., which six years ago had to sell part of its property near Houston to pay bills, said Monday that a $189-million repurchase of the 68-acre office complex will result in an additional $12.4 million in quarterly net income.

Fluor will pay an unidentified real estate partnership $64 million in cash and assume a $32-million, long-term debt on the property. This will return Fluor to sole ownership of the 1.2-million-square-foot complex in Sugar Land, Tex., a Houston suburb. Since 1987, Fluor has purchased $93 million in bonds that the real estate partnership had issued to help finance its $161-million acquisition of the property in 1985.

This deal also lets the international engineering and construction giant recapture the equivalent of about 14 years of office rent payments and is expected to add $12.4 million, or 15 cents per share, to the company’s net earnings in the third quarter ending July 31.

Fluor spokeswoman Deborah Land said the company’s decision to repurchase the property and facilities was financially viable, considering the property value, rental rates and taxes in the Houston area. Fluor’s Houston work force, which dipped as low as 500 in the mid-1980s, has increased to about 2,500 employees, who occupy most of the facility, she said.

“It is financially desirable for our company to return to a full ownership position,” she said.

Fluor experienced a cash crunch in the mid-1980s and sold the buildings on 68 acres of its 338-acre Sugar Land property. As part of that deal, Fluor signed a 20-year lease-back agreement with the partnership; a Fluor subsidiary, Fluor Daniel Inc., continued to manage the office complex.

Separately, Fluor on Monday confirmed that its St. Louis-based lead-mining subsidiary, The Doe Run Co., laid off a quarter of its 1,040 employees in April as the lead industry continues to suffer from weak prices.

The wholly owned subsidiary, which is the largest integrated lead producer in the country, has cut production from 235,000 tons to 175,000 tons. Doe Run has shut down two of its six mines in south-central Missouri and temporarily shut one of its two smelters in Herculaneum, Mo., Land said.