Canada and Quebec can survive SNC-Lavalin's collapse: Fraser Institute
MONTREAL -- Despite a turbulent short-term horizon, Quebec's Caisse de depot does not intend to dump SNC-Lavalin Group Inc. amidst the ongoing firestorm.
The Caisse -- the province's pension fund manager and SNC-Lavalin's largest shareholder with a stake of about 20 per cent -- delivered a vote of confidence in the beleaguered construction giant Thursday.
"The markets have probably overreacted recently," said Caisse chief executive Michael Sabia of SNC-Lavalin. "This represents an investment opportunity."
In addition to its run-in with the courts, SNC-Lavalin, set to release its fourth quarter results on Friday, has offered up unwelcome surprises for investors since late January by slashing its earnings forecasts twice.
The Montreal-based company is facing challenges at a mining project in Chile as well as instability in Saudi Arabia due to diplomatic tensions between Ottawa and Riyadh.
The uncertainty comes amidst the company's ongoing fraud and corruption case in Canada tied to alleged crimes committed in Libya between 2001 and 2011. A conviction could prevent SNC-Lavalin from bidding on federal contracts for up to 10 years.
The gauntlet of woes has tanked the company's share price, which now hovers at around $35 on the Toronto Stock Exchange.
Asked at a press conference following the Caisse's annual results, Sabia avoided commenting on the repercussions of a possible criminal conviction.
"I think it's important to understand the significance of the magnitude of change in this company in recent years," he said. "There was a new board, a new direction. It's about big changes in culture."
SNC-Lavalin is embroiled in a controversy in Ottawa over allegations that Prime Minister Justin Trudeau's office pressured the former justice minister to steer federal prosecutors toward negotiations for a settlement agreement with the firm in order to avoid criminal prosecution.
Sabia said the Caisse would "be a rock" for SNC-Lavalin and ready to boost its stake in the company, barring any technical barriers.
He dismissed the delays in the Chilean mining project as short-term and said the Caisse invests for the long-term, arguing that SNC-Lavalin is well positioned to seize opportunities around the globe.
"The world needs billions of dollars in infrastructure investments, not just in emerging markets, but also in developed countries," Sabia said. "Our job is to identify companies with a lot of potential in the long run. That's exactly the definition of SNC-Lavalin."
That confidence did not prevent Standard & Poor's rating agency from lowering the firm's credit rating, while DBRS placed the company under review with a negative outlook.
SNC-Lavalin may also face criminal charges in connection to a contract from the early 2000s to refurbish Montreal's Jacques Cartier Bridge, court documents show.