SNC-Lavalin looking to sell some of its stake in Toronto’s Hwy. 407 toll road

MONTREAL—SNC-Lavalin Group Inc. says it is looking to sell a portion of its investment in the Highway 407 toll highway outside of Toronto that analysts estimate could fetch more than $2 billion.

The Montreal-based engineering and construction firm said last week that it has hired CIBC Capital Markets and RBC Capital Markets to help advise it on a potential sale of 6.76 per cent of its investment through a direct sale or other type of transaction.

The sale would leave SNC-Lavalin with a 10 per cent stake, alongside co-owners Spanish multinational Cintra Infraestructuras and the Canada Pension Plan Investment Board.

The company, which previously mused about selling the investment, believes it could be a good time to consider the transaction. Determination of how the proceeds would be used will be made at the time of a transaction.

A sale would help investors to value the company’s core business more accurately, it said in a news release.

Yuri Lynk of Canaccord Genuity said the decision’s timing is strange, since it comes before SNC-Lavalin is able to enter into a deferred prosecution agreement to settle past wrongdoing.

Under a DPA, criminal prosecution is suspended if the accused admits guilt, pays a significant fine, puts safeguards in place and co-operates with authorities. Upon completion, the charges are withdrawn.

SNC-Lavalin has pleaded not guilty to the one fraud and one corruption charge filed by the RCMP against it and two of its subsidiaries.

The RCMP alleges SNC-Lavalin paid nearly $47.7 million to public officials in Libya and defrauded various Libyan organizations of about $129.8 million.

A preliminary hearing is slated to begin in September. The company said the actions were taken by executives who are no longer with the company and who face criminal charges.

The highway’s potential partial sale overshadowed SNC-Lavalin’s second-quarter results.

The company said it earned $83 million or 47 cents per diluted share, down from $136.4 million or 91 cents per share a year earlier.

The profit included $88 million to settle a 2012 class action lawsuit and a $62.7-million net gain from the sale of its investments in Montreal’s McGill University Health Centre and SNC-Lavalin Infrastructure Partners.

SNC-Lavalin’s backlog was $15.2 billion, up from $10.4 billion six months earlier.