SNC cancels sale

Photo: The Canadian Press

SNC-Lavalin Group Inc. has cancelled the sale of part of its stake in 407 International Inc. to the OMERS pension plan but will sell the stake to one or both of the other owners of the Ontario toll highway.

The Montreal-based company said Friday the Canada Pension Plan Investment Board, which already owns a 40 per cent stake in 407 International Inc., has exercised its right of first refusal.

Cintra Global S.E., a Spanish company that owns a 43.23 per cent stake in the toll highway, has also sought to exercise its right of first refusal, but SNC disputes its ability to do so under the circumstances.

The dispute in headed to the Ontario Superior Court with a hearing set for June 21.

However, the companies have agreed that following the court's initial decision, SNC-Lavalin will be permitted to sell the stake to either CPPIB alone or both CPPIB and Cintra under similar terms it agreed to with OMERS.

OMERS had agreed to buy a 10.01 per cent stake in 407 International Inc. for $3 billion plus an additional $250 million over 10 years, conditional on certain financial targets.

SNC's position is that Cintra agreed in 2002 to waive its right of first refusal involving purchasers that do not have competing interests "in relation to construction, operations, asset management of, and investment in road or airport infrastructure projects other than solely as a financial investor such as a pension or superannuation fund."

However, Cintra claims that OMERS is a competitor and does not fall within the waiver's exception for financial investors.

"SNC-Lavalin remains confident in its position that Cintra's claims and arguments are entirely without merit and that Cintra does not have the right to disrupt or participate in either the original sale transaction between SNC-Lavalin and OMERS, or in the sale transaction between SNC-Lavalin and CPPIB," SNC said in a statement.