SNC-Lavalin shares drop further on North Africa unrest

Mon Feb 28, 2011 4:29pm EST
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VANCOUVER (Reuters) - Shares of SNC-Lavalin Group Inc slid further on Monday on fears unrest in Libya could spread to other countries in the Middle East and Africa, a region where the Canadian construction company generates a quarter of its revenue.

The stock fell 1.5 percent on the Toronto Stock Exchange on Monday to C$56.24 for a loss of 8 percent in the past week.

"It is the fear of contagion," said NCP Northland analyst Maxim Sytchev. The worry is "if Algeria is going to end up in the same situation as Libya. What about Mauritania and other adjacent countries?" Sytchev said.

Unrest across the Middle East and North Africa has already unseated leaders in Tunisia and Egypt. It has now spread to Bahrain, Yemen and Libya, where rebels on Monday fought government forces trying to take back strategic coastal cities. [nLDE71Q0MP]

Analysts estimate about 15 percent of SNC-Lavalin's revenue comes from North Africa, with a further 10 percent coming from the Middle East, for a total of 25 percent or about C$1.5 billion ($1.51 billion).

SNC-Lavalin said last week it is temporarily halting work on some projects in Libya after security forces killed dozens of people during anti-government protests in the country.

The Montreal-based company is working on three major projects in Libya: a C$500 million expansion of the airport in Benghazi, the center of violent clashes last week; some C$450 million ongoing work on a major water pipeline, the Great Man Man River system; and a jail in the capital Tripoli.

The Libyan projects contribute 3 to 4 percent of SNC-Lavalin's revenue, analysts said.

Elsewhere in the region, SNC-Lavalin is working on a C$1.2 billion natural gas treatment plant in Algeria, water cooling plants in Saudi Arabia and acid plants in Jordan.   Continued...