FWC might be a company to look at, they build power plants
and I believe have built nuclear ones in the past
the country may need a couple of more refineries as well.
I think 46 were closed in the 1990's and not a single new
one built. but you need much more serious DD before
leaping to the conclusion that FWC is a buy.
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November 30, 2000
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Foster Wheeler Plans to Move
Its Headquarters to Bermuda
By JERRY MARKON
Staff Reporter of THE WALL STREET JOURNAL
Foster Wheeler Corp., a New Jersey engineering and construction concern, said it plans to move its legal headquarters to Bermuda. The announcement comes as some in Congress are worried about a handful of insurers and other companies moving overseas to cut their tax bills.
The designer of power plants and oil refineries said the decision would give it "greater operational flexibility and better position us to manage international cash flows and our complex world-wide tax arrangements." Foster Wheeler says 70% of its business is conducted overseas.
By shifting its parent company to Bermuda, which doesn't have corporate taxes, Foster Wheeler, of Clinton, N.J., would avoid paying U.S. taxes on income it earns outside the U.S. If the transaction is approved by shareholders in April, Foster Wheeler would join the dozen or so U.S. companies, including several insurers and the diversified conglomerate Tyco International Ltd., which is based in Bermuda but has its operational headquarters in Exeter, N.H., that have made similar moves in the past several years.
Congress held hearings on the issue last year and a House bill seeking to close a tax-law loophole that enables insurance companies to avoid certain U.S. taxes by locating overseas is expected to be reintroduced next session.
The Internal Revenue Service tried to make it less appealing for U.S. companies to move their headquarters overseas in 1996 by taxing the exchange of stock that occurred when companies give their shareholders stock in the new foreign corporation for their shares in the U.S. company.
Under its plan, Foster Wheeler would create a holding company based in Bermuda that will be called Foster Wheeler Ltd. Shareholders of Foster Wheeler Corp. would exchange their shares for the same number of Foster Wheeler Ltd. shares. The company said it expects the Bermuda entity to be listed on the New York Stock Exchange under the same symbol, FWC.
Because Foster Wheeler shares have fallen significantly over the past few years, the share exchange is unlikely to cause a large, if any, tax bill for many shareholders. "That's why we think this is not a big deal," said Chief Financial Officer Gilles Renaud. "One of our considerations was to make sure the average basis for the average shareholder would be in a position, so they would not have to suffer severe tax consequences."
At 4 p.m. in Big Board composite trading Wednesday, Foster Wheeler was up six cents at $4.50, just above the 52-week low of $4.25 set Monday. For much of the 1980s and '90s, the shares traded at between $20 and $48, before beginning its decline in 1998.
"This is a tax strategy that's available to a very small category of companies whose shares are not appreciating in a substantial way," said Leslie B. Samuels, a partner for the New York law firm of Cleary, Gottlieb, Steen & Hamilton and a former assistant secretary in the U.S. Treasury Department. "If you look at the companies that have done this in the last few years, it's maybe two a year, and they're not household names."
Foster-Wheeler officials point out that they will continue to run the company from its corporate headquarters in New Jersey, saying the change essentially would be only a paper transaction.
For the nine months ended Sept. 30, Foster Wheeler reported net income of $27.2 million, or 67 cents a diluted share, on revenue of $2.88 billion. Included in those results was a provision for income taxes of $12.8 million.
Write to Jerry Markon at jerry.markon@wsj.com
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