SNC-Lavalin launches payments probe, stock tumbles
By Nicole Mordant
(Reuters) - Shares of SNC-Lavalin Group Inc (SNC.TO: Quote) tumbled on Tuesday after it revealed a probe into tens of millions of dollars of mysterious payments and warned that the impact of Libya's civil war would push its 2011 profit well below earlier forecasts.
The Canadian engineering and construction company, which also may delay the release of quarterly financial results, did not say whether the internal probe was in any way related to its extensive business dealings with the now-deposed regime of former Libyan dictator Muammar Gaddafi.
SNC, a century-old company with operations in about 100 countries and revenues of C$6.3 billion ($6.3 billion) in 2010, lost about a quarter of its market value after the Tuesday announcement.
Earlier this month, Montreal-based SNC suspended two company executives who Canadian newspapers said had ties with the family of the Libyan leader, who was killed by rebel forces last year after being driven from power.
In a carefully word statement on Tuesday, SNC said it expected to record payments of about C$35 million "relating to certain payments" in the fourth quarter that were linked to construction projects that were unrelated to the expenses.
SNC's board has started an independent investigation into the payments, and the company has retained lawyers. A company spokeswoman declined to comment further.
"They can't afford to be anything but 100 percent diligent on anything that raises any red flags right now," said Versant Partners analyst Neil Linsdell.
"If what we know today is the extent of it, the sell-off is overdone. Obviously the market is suggesting that there is more, or at least, it is afraid that there is more," he said. Continued...