SNC-Lavalin May Be Pushed to Sell Concessions: Analyst

Maxim Sytchev SNC Lavalin

As embattled construction and engineering company SNC-Lavalin prepares to welcome its new CEO, an analyst has suggested the company might be pressured to sell off some of its concessions.

Maxim Sytchev of Alta Corp Capital suggested the company could be pushed by an activist shareholder to sell some or all of its concessions to boost its value.

Sytchev added that incoming SNC-Lavalin CEO Robert Card could be on a short leash, with investors eager to see improvements to its valuation. Should change not come quickly, he said, the company could face the kind of investor-led action that led to sweeping management changes at Canadian Pacific Railways. CP was pushed to act by US-based hedge fund Pershing Square Capital Management.

“If Pershing could move the needle on much larger CP, there is no reason to think why something transformational could not be accomplished with SNC-Lavalin,” Sytchev stated in a report.

With Card taking the reins on Monday, SNC-Lavalin is hoping to move past a bribery scandal that saw $56 million in payments to unknown recipients in northern Africa unaccounted for. That scandal led to a shake-up atop the company’s corporate ladder, including the resignation of then-president and CEO Peter Duhaime and the arrest of former executive vice president Riadh Ben Aissa.

Sytchev said following a short grace period after Card takes over, investors could push for a change quickly.

SNC Lavalin

“A lot of people are doing work in the background and yes I think the probability of somebody stepping up to the plate and maybe becoming more public in that regard, the probability is there for sure,” he told the Canadian Press.

The company’s concessions include a stake in Highway 407, American Astoria power plants and AltaLink, among others.

While Sytchev believes SNC-Lavalin – and Card – could face an uphill battle with investors, one of the company’s key backers says investors are looking for the company to rebound under new leadership and are not clamouring for the Montreal-based construction giant to take the steps Sytchev believes it may be pushed to take.

Stephen Jarislowsky, whose company has more than a 14 per cent stake in SNC-Lavalin opposes the concept of SNC-Lavalin selling off concessions.

“I think there’s a need to do something to get more value and it’s by re-establishing the company on an ethical and sound footing the way it used to be always and to look for business,” he told CP.

Card will officially take over as SNC-Lavalin CEO on Monday.

By Mark Schafer
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