MONTREAL – SNC-Lavalin Group Inc. says an Ontario judge has cleared it to proceed with the $3.25-billion sale of a stake the 407 toll highway, paving the way for the beleaguered company to pay off hundreds of millions in debt.
The engineering giant says the Ontario Superior Court has dismissed an attempt by Cintra Global S.E. to block the sale to the Canada Pension Plan Investment Board (CPPIB) and claim the 10 per cent stake in 407 International Inc. for itself.
SNC-Lavalin says the court agreed with it and the pension board that Cintra – a subsidiary of Spanish multinational Ferrovial S.A. – had waived its right of first refusal in a 2002 agreement.
SNC-Lavalin says that even if the decision were reversed on appeal, Cintra and the pension board have agreed the transaction would not. In that scenario, Cintra and the CPPIB would adjust the number of shares between them.
Management confirmed last week they plan to put the proceeds toward debt repayment, including a $600-million payment on a loan from the Caisse, Quebec’s pension fund manager.
About $3 billion from the sale is payable at the closing date and $250 million over the next 10 years. SNC expects the deal to close within the month.
In May, the Montreal-based company cancelled its initial plan to sell a part of its 16.77 per cent stake in Ontario’s 407 highway to the OMERS pension plan, spawning a legal battle between Cintra and the CPPIB, which already have a roughly 43 per cent and 40 per cent stake in the toll road, respectively.