Quebec Economy Minister Pierre Fitzgibbon said Wednesday the province will not offer financial help to SNC-Lavalin Group Inc. in spite of the construction giant's woes.
"Despite the obvious operational problems… I don't see the need for the Quebec government to intervene at the financial level," he told reporters in Montreal.
Fitzgibbon cited the Montreal-based company's pending sale of part of its stake in Ontario's 407 toll highway as proof of liquidity.
"The issue to me is not, will they get the money, but when they will get the money," the minister said.
407 International Inc.'s two other owners – the Canada Pension Plan Investment Board and Cintra Global S.E., a subsidiary of Spanish multinational Ferrovial S.A. – are engaged in a legal battle over which one gets to scoop up the $3.25-billion stake.
"I'm optimistic, but it is a difficult period for them to go through," Fitzgibbon said of the beleaguered firm.
However, he left the door open to a bailout down the line, as SNC's falling share price leaves it increasingly vulnerable to potential hostile bids.
"If a transaction were required to save it from a hostile takeover, we could intervene," he said.
SNC-Lavalin unveiled a $1.9-billion impairment charge and slashed its profit forecast Monday for the third time this year as new CEO Ian Edwards shifts toward a more stable business model based on engineering services rather than fixed-price construction contracts where cost overruns can eat into profits. Included in this field is the firm’s work on phase two of Ottawa’s LRT, but a spokesperson for SNC told OBJ this week it will fulfill commitments on the $1.6-billion project before exiting the business.
The company, which faces ongoing bribery and corruption charges tied to business dealings in Libya, now expects core adjusted losses of between $150 million and $175 million in the latest quarter, far worse than analysts' previous expectations. Its share price has plummeted by more than 62 per cent over the past year to about $21.
On Monday, Quebec's Caisse de depot, SNC's largest investor at nearly 20 per cent, took the rare step of publicly rebuking the firm, saying the situation "requires decisive and timely action" by the board.
– With files from OBJ staff