Canadian activist fund West Face acquires stake in SNC-Lavalin

Thu Feb 7, 2013 5:37pm EST
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(Reuters) - Canada's West Face Capital, an activist fund that successfully pressured for a shake-up at Maple Leaf Foods in 2010, has acquired a minority stake in SNC-Lavalin Group Inc (SNC.TO: Quote), the scandal-plagued Canadian engineering and construction company.

Shares of the Montreal-based company, whose former chief executive is facing fraud charges, rose 2.5 percent after a newspaper reported that West Face had taken the stake.

SNC spokeswoman Leslie Quinton later said SNC has been aware since last autumn that West Face had become a shareholder.

"The size of their stake is under 10 percent because that is the threshold where its disclosed publicly, so we don't know the precise size," she said in an email.

West Face could not immediately be reached for comment but The Globe and Mail newspaper said on its website that West Face had described its SNC stake as "meaningful."

Quoting a private letter from West Face that the newspaper had obtained, the paper said the fund had accumulated the stake because it believed that investors had over-reacted to negative news about SNC and had ignored the intrinsic value of the stock, which it pegged at between C$50 and C$75 a share.

SNC shares closed at C$47.49 on Thursday, up nearly 2.5 percent. The stock has made up some lost ground this year after losing more than 20 percent of its value in 2012, weighed down by an ethics scandal at the 101-year-old company.

SNC's former CEO quit in March of last year and was subsequently arrested in November on charges of fraud and the use of false documents.

Police are also investigating allegations of corruption and money laundering against other former company officials.   Continued...