Fluor said Monday that it intends to sell its 90% stake in St. Joe Gold Corp. to one of several bidders, including a management team lead by Fluor President John Wright.
Wright simultaneously resigned as a director and president of the Irvine-based company to pursue the deal, which analysts said could be worth as much as $500 million. He retains his positions as chairman of Fluor's St. Joe Gold and St. Joe Mineral subsidiaries, but was succeeded as president of Fluor by company Chairman and Chief Executive David S. Tappan Jr.
The moves surprised Wall Street analysts, some of whom had been predicting that the 44-year-old Wright was an obvious successor to Tappan, who is scheduled to retire in May, 1989.
Fluor's decision to sell its share of St. Joe Gold, however, came as little surprise to analysts.
In the wake of declining natural resource prices, a drastic slowdown in oil-related construction projects and staggering corporate losses of $727 million in the past 27 months, Fluor has been restructuring to concentrate on expanding its engineering and construction operations.
For at least the past year, Fluor officials have repeatedly said that the mix of construction and natural resources was not working, hinting broadly that the company would sell portions of St. Joe Minerals, which it bought in 1981 for $2.2 billion.
A Fluor spokesman declined to speculate on the price the company might receive for St. Joe Gold, a publicly traded mineral subsidiary that Fluor created last year by spinning off 10%, or 3 million shares, of its stock to public investors.
However, analysts suggested that the most Fluor could expect to receive for its 90% stake in the company is the current $486-million value of its 27 million shares of stock. The shares closed Monday unchanged at $18 each on the American Stock Exchange. The announcement was made after the market closed.
Fluor said it had received about 20 inquiries from potential buyers of the subsidiary since retaining an investment banking company last month to determine the value of St. Joe Gold. In recent weeks, the spokesman said, the company had narrowed the field to "fewer than 10 with the financial qualifications necessary to pursue" the purchase. He declined to reveal any of the potential buyers except for the Wright-led management group.
With Wright out of the corporate lineup, potential successors to Tappan include Leslie McCraw, president of Fluor Daniel, the major construction arm of the corporation; Vince Kontny, president of Fluor Daniel's U.S. operations; Hugh Coble, president of Fluor Daniel's international operations, and Gerald Glenn, president of the subsidiary's worldwide marketing.
The 51-year-old McCraw, who already holds a seat on Fluor's board, is said to now have the inside track for Tappan's position, largely because of the company's renewed emphasis on the construction business he oversees. At the request of the directors, Tappan agreed last year to postpone his retirement two years beyond his 65th birthday, which he celebrated in May.