SNC-Lavalin to close 10.01% stake in Highway 407 ETR to CPPIB for $3.25B

SNC-Lavalin (TSX: SNC) said it be proceeding with closing the sale of the 10.01% stake in 407 International Inc. with Canada Pension Plan Investment Board (CPPIB) following the dismissal by the Ontario Superior Court, Commercial List of the application by Cintra Global S.E.

The Court agreed with SNC-Lavalin and CPPIB that Cintra had waived, through an agreement with SNC-Lavalin in 2002, its right of first refusal (ROFR) with respect to the original sale transaction concluded with OMERS in April 2019. SNC-Lavalin currently expects the closing of the sale with CPPIB to occur within the month.

If the Court’s decision were to be reversed on appeal, SNC-Lavalin’s sale to CPPIB would not be reversed. Instead, CPPIB and Cintra would adjust the purchaser-owner of the relevant number of shares of Highway 407 ETR as between them.

SNC-Lavalin will receive up to $3.25 billion from the sale, $3.0 billion payable at the closing date and $250 million over a period of 10 years, conditional to certain financial thresholds related to the ongoing performance of Highway 407 ETR.

Current common shareholders of Highway 407 ETR consist of a subsidiary of Cintra, itself a subsidiary of Ferrovial S.A., which owns 43.23% of the common shares, indirectly owned subsidiaries of CPPIB which own approximately 40% of the common shares, and SNC-Lavalin which owns a total of 16.77% of the common shares.

Upon closing of the transaction, CPPIB will gain control of 407 International.

photo credit: Highway 407 ETR

News Release

SNC-Lavalin to proceed with closing of sale of 10.01% stake of Highway 407 ETR

MONTREAL, Aug. 7, 2019 /CNW Telbec/ – SNC-Lavalin (TSX: SNC) is pleased to announce that it will be proceeding with closing the sale of the 10.01% stake in 407 International Inc. (“Highway 407 ETR”) with Canada Pension Plan Investment Board (“CPPIB”) following the dismissal by the Ontario Superior Court, Commercial List (the “Court”) of the application by Cintra Global S.E. (“Cintra”). The Court agreed with SNC-Lavalin and CPPIB that Cintra had waived, through an agreement with SNC-Lavalin in 2002, its right of first refusal (“ROFR”) with respect to the original sale transaction concluded with OMERS in April 2019. SNC-Lavalin currently expects the closing of the sale with CPPIB to occur within the month.

As previously announced, SNC-Lavalin, Cintra and CPPIB have agreed that even if the Court’s decision were to be reversed on appeal, SNC-Lavalin’s sale to CPPIB would not be reversed. Instead, CPPIB and Cintra would adjust the purchaser-owner of the relevant number of shares of Highway 407 ETR as between them.

Based on the terms of the agreement, gross proceeds to SNC-Lavalin from the sale could reach $3.25 billion in aggregate, $3.0 billion payable at the closing date and $250 million over a period of 10 years, conditional to certain financial thresholds related to the ongoing performance of Highway 407 ETR. Net proceeds from this transaction will be used to strengthen the balance sheet and more specifically for the execution of the Company’s deleveraging plans.

Background of the announcement

Prior to the closing of the sale transaction, the current common shareholders of Highway 407 ETR consist of a subsidiary of Cintra, itself a subsidiary of Ferrovial S.A., which owns 43.23% of the common shares, indirectly owned subsidiaries of CPPIB which own approximately 40% of the common shares, and SNC-Lavalin which owns a total of 16.77% of the common shares.

Cintra commenced an application in the Court for a determination of whether it had validly exercised a ROFR with respect to the original OMERS transaction. SNC-Lavalin and CPPIB opposed the application on the basis that Cintra had waived its ROFR. The expedited hearing before the Court took place on June 21, 2019 and the Court’s recent decision confirmed the position of SNC-Lavalin and CPPIB.

About SNC-Lavalin
Founded in 1911, SNC-Lavalin is a global fully integrated professional services and project management company and a major player in the ownership of infrastructure. From offices around the world, SNC-Lavalin’s employees think beyond engineering. Our teams provide comprehensive end-to-end project solutions – including capital investment, consulting, design, engineering, construction management, sustaining capital and operations and maintenance – to clients across the EDPM (engineering, design and project management), Infrastructure, Nuclear, and Resources businesses. www.snclavalin.com

SOURCE SNC-Lavalin

For further information: Media: Daniela Pizzuto, Director, External Communications, 514-393-8000, ext. 54772, media@snclavalin.com; Investors: Denis Jasmin, Vice President, Investor Relations, 514-393-8000, ext. 57553, denis.jasmin@snclavalin.com

Ted Liu

Ted Liu, M.Sc. (Mining, Queen's), MBA (Finance, Toronto), is the Editor of Private Capital Journal, CanadaMetals.ca, TechWire.ca, and the former Editor of Canadian Private Equity. Ted has been passionately tracking Canadian private capital industry since 1992, having most recently served as Research Director for The Canadian Venture Capital and Private Equity Association (CVCA).

Ted is the architect of CVCA infobase, and is the architect of CPE Media's Financings.ca, Canada's most sophisticated and advanced all private capital and public market financing database.