SNC free to leave Montreal in 2024 after shareholders rejected the proposal

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MONTREAL –
SNC-Lavalin Group Inc. Will be free to withdraw issues from Montreal – headquarters of its operations for more than a century – by 2024, like a “Plan B” which it submitted to federal prosecutors in 2018.

Shareholders voted on Thursday to maintain a settlement provision that allows the engineering firm to move to another province. The company is attached to Montreal for the next four years thanks to the conditions attached to a $ 1.5 billion loan from the manager of the Quebec pension fund, which enabled SNC to acquire the British competitor WS Atkins in 2017.

When this loan is paid off, the terms expire, mooring the business.

Highlighting SNC’s open horizon was the rejection by shareholders of a Montreal group proposal for MEDAC investor rights at the company’s annual general meeting on Thursday.

MEDAC asked the board of directors to commit to preserving SNC’s head office in Quebec after senior management “informed the federal government that it was seriously considering moving the head office from Montreal to the United Kingdom” they did not agree to settle the corruption charges amicably. filed against the company. “

The Board of Directors recommended that shareholders vote against the proposal, highlighting its commitment to the second largest city in Canada until 2024. “(W) we are deeply determined to remain a Canadian company based in Montreal with our headquarters social in Quebec, “said SNC in its proxy circular.

Last December, SNC-Lavalin settled criminal charges related to commercial transactions in Libya, its construction division having pleaded guilty to one count of fraud which contributed to the creation of a long-standing scandal that tarnished its reputation and trapped the highest office of the Canadian government. .

SNC had warned Ottawa in September 2018 of a possible plan to split the company in two, move its offices to the United States and eliminate its Canadian workforce if it did not reach an agreement to avoid criminal proceedings, according to documents obtained by The Canadian Press last year.

The PowerPoint presentation documents describe a “Plan B” describing how SNC might have to relocate its head office in Montreal and its offices in Ontario and Quebec in the United States within a year, reducing its workforce to only 3,500 versus 8,700 before terminate its Canadian operations.

“We do not understand why the company’s commitment to maintain its head office in Montreal is part of an agreement with a major investor,” said MEDAC at the online AGM, referring to Caisse de depot. and placement. “Would SNC have wanted to leave otherwise?” This seems totally inconceivable to us. “

CEO Ian Edwards and President Kevin Lynch, who plans to resign shortly, did not comment on the MEDAC proposal at the meeting.

“We have indicated on numerous occasions that we are focusing on implementing our new strategic direction, and thus building a world-class engineering services company headquartered in Montreal,” said SNC in an email to The Canadian Press.

Changes to the company’s by-laws on the location of its head office prompted the vote, and were “essentially changes to allow for a virtual general meeting,” said SNC.

In its financial results released Thursday, SNC-Lavalin saw its loss in the first quarter worsen compared to a year ago, as it took charge due to the drop in expected payments related to its sale on the road Highway 407 toll booth in Ontario.

The company said it lost $ 66 million or 38 cents per share for the quarter ended March 31, including a charge of $ 57.2 million related to the revaluation of the fair value of contingent payments related to the sale of ” a large part of its interest in Ontario Highway 407. toll road.

Earnings were down 282% from a loss of $ 17.3 million or 10 cents per share in the same quarter last year.

Revenues for the quarter totaled nearly $ 2.23 billion, compared to $ 2.36 billion a year ago.

On an adjusted basis, SNC earned nearly $ 25.7 million or 15 cents a share for the quarter, down from an adjusted profit of nearly $ 36.9 million or 21 cents a share a year ago. a year. Analysts had expected adjusted earnings of 25 cents a share, according to financial market data company Refinitiv.

Adjusted loss from professional services and project management activities amounted to $ 3.9 million or two cents per diluted share, compared to an adjusted net loss of $ 14.9 million or eight cents per share one year earlier.

SNC-Lavalin shares closed down $ 2.15 or 8.9% to $ 21.92 on Thursday on the Toronto Stock Exchange.

This report from The Canadian Press was first published on May 7, 2020.

With files from Julien Arsenault

Correction:

An earlier version mentions the head office of Bombardier rather than that of SNC.

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