Lead Mining Subsidiary Sold by Fluor to Renco Group : Divestiture: Terms are not disclosed. Doe Run operation had weighed heavily on company’s profit in recent years.
Fluor Corp. said Thursday it finally has sold the lead mining business that had been weighing down its profits for several years.
Terms of the sale of St. Louis-based Doe Run Co. to an affiliate of the Renco Group in New York were not disclosed, but Fluor officials said the deal would have no impact on the corporation’s earnings--meaning it was probably sold for the $175 million at which Fluor valued the subsidiary’s assets.
While this deal is not expected to alter Fluor’s bottom line for 1994, the company still stands to glean big benefits from the sale: Renco has relieved Fluor, an international construction and engineering firm, of all liabilities from the mining and sale of lead products.
Lead is a toxic metal and Fluor officials reportedly had become increasingly concerned about the potentially huge cost of cleaning up mining and processing sites and of the potential for damaging litigation by workers and consumers who might contend that their health was injured by lead mined in Doe Run operations.
The ruinous costs of asbestos-related health claims helped drive Manville Corp. and other asbestos producers into bankruptcy in the 1980s. By 1990 Manville had paid more than $1.1 billion to settle claims.
“I’m sure everybody at Fluor is happy” about being relieved of liability, said analyst John N. Simon of the Seidler Group in Los Angeles.
Fluor’s common stock rose $1.625 a share Thursday in moderate trading on the New York Stock Exchange, closing at $53.75 a share. The Doe Run sale was announced after the market closed.
Fluor has been trying to sell Doe Run since 1992, when it declared it a discontinued operation and set aside a $79-million reserve to cover estimated losses from the future sale of the subsidiary.
In its 1993 annual report, Fluor said it lost a further $30 million on lead mining operations despite sales revenue of $121 million from the subsidiary.
The sale to Renco Group included a cash payment to Fluor as well as an interest-bearing note. Fluor will also share in Doe Run’s future profitability, but the company said it otherwise will have no ongoing involvement in the lead business.
In a statement issued Thursday, Fluor Chairman Les McCraw said doe Run “no longer fits our long-term strategic direction. Their new association with the Renco Group is an excellent fit and is in the best interest of all stake holders.”
Renco Group, which had about $1.3 billion in sales last year, is a privately owned holding company with investments in natural resources and industrial operations. Its holdings include a steel mill in Toledo, Ohio; a magnesium producer, a women’s handbag factory and AM General, the company that makes the Hummer all-terrain vehicle used by U.S. military forces.
Doe Run is the largest integrated producer of lead in North America, with 1994 production estimated at 190,000 tons. The company has about 800 workers at six mines, four mills and two smelters, all located in southeast Missouri.
