SNC-Lavalin looks to sell equity stake in AltaLink
By Solarina Ho
TORONTO, Sept 30 (Reuters) - SNC-Lavalin Group wants to sell an equity stake in AltaLink, Alberta's largest regulated electricity transmission company, the Canadian engineering and construction company said on Monday.
AltaLink, which owns more than half of Alberta's transmission grid, operates and maintains about 12,000 kilometers of transmission lines and 280 substations, serving 85 percent of the province's population. It is wholly owned by SNC.
The move is part of SNC's strategic plan, announced at its annual meeting in May, to trim its ownership of infrastructure investments and monetize assets.
In early September, the company said it was selling 66 percent of its minority interest in Astoria Project Partners.
In a note to clients, Maxim Sytchev, an analyst at Dundee Securities, said that selling a stake in AltaLink is necessary. He said AltaLink is undervalued and noted SNC's need to pour C$600 million ($582.38 million) to C$1 billion into the transmission company over the next three years.
"While SNC is in a net cash position, AltaLink's cash requirements would have still posed a drag to SNC's cash balance," said Sytchev, who has a "buy" rating on SNC and values AltaLink's equity state at C$10.32 a share versus a consensus of C$8.00 to C$9.00 a share.
"A sale to a strategic or passive (read pension fund) investor is even better when compared to a spin-off," he added.
SNC shares rose 3.3 percent to C$42.70 on Monday morning on the Toronto Stock Exchange to their highest level since Aug. 1. The stock gained even though the market's benchmark index was down about 0.6 percent. Continued...