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Moody's Drops Its Rating on Fluor's Debt

March 03, 1987|LESLIE BERKMAN | Times Staff Writer

Moody's Investors Service on Monday lowered its rating of Fluor Corp.'s long-term debt below what Wall Street analysts consider "investment grade" and placed a "below prime" rating on the company's commercial paper, a form of corporate IOU.

The greater risk ratings are expected to make it more expensive for giant the Irvine-based natural resources, construction and engineering firm to borrow funds.

The downgrading came just three days after Fluor suspended its quarterly 10-cents per share dividend.

Moody's, in explaining its reasons for downgrading Fluor's debt ratings, said that "pressures on (Fluor's) earnings and cash flows are likely to continue for some time . . . although Fluor's continuing core businesses have strong positions within their industries and have staying power."

Moody's predicted that Fluor, which has had two consecutive years of losses, will continue to have difficulty making money, despite attempts by its engineering and construction units to pursue industrial and service work to replace the oil-related projects that were Fluor's mainstays several years ago.

David S. Tappan Jr., Fluor's chairman and chief executive, said the company was "disappointed Moody's has chosen to reduce the company's debt rating. We said a year ago that Fluor's recovery would be both gradual and uneven and that pattern is continuing."

Moody's downgraded to BA2 from BAA3 Fluor's publicly traded debt securities. Fluor's commercial paper rating was lowered from Prime-3 to Not Prime.

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