MONTREAL—The head of SNC-Lavalin says the engineering giant is open to selling its AltaLink infrastructure concession in its entirety—if the price is right.
Due to strong interest from potential buyers, including Quebec’s pension fund manager, the Montreal-based company said it will consider selling both its 100 per cent stake or a minority interest in AltaLink. It is also open to an initial public offering or a private sale.
Calgary-based AltaLink is responsible for almost 60 per cent of Alberta’s electrical transmission requirements.
SNC-Lavalin, which has been battling ethical issues for nearly two years, has already announced plans to sell several non-strategic concessions including a minority interest in the Astoria II power plant in New York and the Alberta transmission line operations.
President and CEO Robert Card said during a conference call the company will continue to evaluate its other concessions and expects to eventually sell all its non-strategic holdings.
“So probably all of our assets are going to become non strategic at one point in time… it’s just a question of time and right now, we don’t think it’s the right time.”
AtlaLink was among the first on the list because of the $600 million to $1 billion in capital expenditures that industry observers believe will be required over the next three years. A deal, which requires regulatory approval in Alberta, is expected to close in about a year.
SNC-Lavalin swung to a $72.7-million loss in the third-quarter, just weeks after warning that its results would be punished by money-losing legacy contracts, weak mining markets and a European restructuring charge.
Card said the difficult decisions made during the quarter that will result in $75 million in charges this year will reduce future earnings volatility and restore selling, general and administrative expenses to historical levels.
Total revenues in the quarter were down about $300 million to $1.94 billion, while its order backlog was $9 billion, compared to $10.1 billion at the end of December 2012.
Card said most of the cost overruns incurred in the infrastructure division are related to Canadian projects, which he didn’t identify by name. Speculation centres primarily on a superhospital being built in Montreal.
SNC-Lavalin expects its 2013 net income will range between $10 million and $50 million, well below its previous guidance of $220 million to $235 million,