The attempt of the SNC-Lavalin Group Inc. To sell a stake in a toll road in Toronto, there are legal headaches, although the dilapidated construction company says the transaction is still on track to continue.
SNC ended a deal to sell a 10 percent stake in 407 International Inc., the 108-kilometer highway north of Toronto, to the OMERS pension fund for $ 3 billion in cash, Montreal-based engineering firm said Friday a statement. The move, which depends on a subsequent payment of a break fee of approximately $ 81.3 million, comes after Canada Pension Plan Investment Board exercised rights of first refusal on the proposed deal.
Another complicating factor, another toll road owner, the Cintra Global unit of Ferrovial SA from Spain, wants to buy about 52 percent of the participation that SNC sells. The SNC disputes the legal capacity to do this, and the case will be brought to court with an early hearing scheduled for June 21.
Cintra owns 43.2 percent of highway 407 and indirect subsidiaries of CPPIB own around 40 percent.
Although the competing interests may delay the sale, the SNC says that the parties agree that, regardless of the outcome, it is permitted to sell the share "as quickly as practically possible".
A representative for OMERS declined to comment. Representatives for Cintra and CPPIB did not immediately return a request for comment.
The sale of the shares, announced in April, was part of the loss-making company's efforts to improve its balance sheet. The company reported an unexpected loss in the first quarter and intensified a cost reduction program to meet annual targets.
The SNC shares in Toronto increased by 0.2 percent to $ 26.82.