Exclusive: West Face pushes SNC-Lavalin to sell 407 highway stake - sources

Tue Jun 28, 2016 5:56pm EDT
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By John Tilak and Allison Lampert

TORONTO/MONTREAL (Reuters) - Canadian hedge fund West Face Capital is pushing SNC-Lavalin Group Inc to sell its stake in Ontario's 407 toll highway, a move that could fetch the engineering and construction company more than C$5 billion ($3.83 billion), according to two sources familiar with the process.

West Face is an SNC shareholder but has not disclosed the size of its holding. SNC owns about 17 percent of the 407, which many investors see as a non-core asset.

Stretching from the Ontario cities of Burlington to Pickering, the 407 is a 108-km (67-mile) electronic toll highway that runs north of Toronto. It is in the midst of expansion projects aimed at improving its growth profile and value.

SNC could begin the process of selling its 407 stake as early as later this year, said the sources, who declined to be identified because the matter is not yet public.

SNC-Lavalin spokesman Louis-Antoine Paquin said on Tuesday that the company "continually reviews all opportunities that would be accretive to the company and improve value for shareholders." West Face declined comment.

The push to sell the Ontario toll road comes after West Face in 2013 called for SNC's sale of AltaLink, Alberta's largest regulated electricity transmission company. SNC sold its stake in AltaLink to Berkshire Hathaway Inc's energy unit for about C$3.1 billion in 2014.

Other investors in the 407 are Cintra Infraestructuras Internacional S.L., a unit of Ferrovial S. A., and Canada Pension Plan Investment Board.

The sale of the stake in an infrastructure asset with a steady cash flow would likely attract strong interest from pension and sovereign wealth funds and other infrastructure investors.   Continued...

A Royal Canadian Mounted Police (RCMP) officer looks at a receptionist at the headquarters of SNC Lavalin in Montreal in this file photo dated April 13, 2012. REUTERS/Christinne Muschi