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Sep 11, 2019

Ferrovial appeals decision on SNC-Lavalin's 407 toll highway sale

SNC shares pop as Jarislowsky Fraser becomes a top shareholder


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TORONTO -- Spanish multinational Ferrovial S.A. is appealing an Ontario Superior Court decision that cleared the way for SNC-Lavalin Group Inc. to proceed with the $3.25-billion sale of a stake in the 407 toll highway to the Canada Pension Plan Investment Board.

An SNC-Lavalin spokesman said in an email that even if the decision were reversed on appeal, the pension board and Cintra Global S.E. -- a Ferrovial subsidiary -- have agreed the transaction would not be. In that scenario, Cintra and the investment board would adjust the number of shares between them.

The pension board completed its purchase of a 10 per cent stake in 407 International Inc. on Aug. 15 after a judge dismissed a legal challenge from Cintra.

Cintra filed a notice to appeal in the Ontario Court of Appeal earlier this week.

The Spanish company declined further comment.

SNC-Lavalin said the appeal will have "no impact" on the Montreal-based engineering giant, which plans to use the cash to pay off hundreds of millions of dollars in debt.

In April, the beleaguered company unveiled a deal to sell part of its 16.8 per cent stake in the 407 highway to the Ontario Municipal Employees Retirement System (OMERS).

The announcement spawned a legal battle between Cintra and the pension board, which each claimed a right of first refusal on the OMERS agreement based on their respective ownership stakes of 43.2 per cent and 40 per cent in the toll road.

SNC-Lavalin faces an upcoming trial on corruption and bribery charges tied to alleged dealings in Libya.

It will also see its name surface over the coming weeks as the federal election campaign kicks off seven months after the eponymous scandal broke, engulfing Ottawa and Prime Minister Justin Trudeau.