MONTREAL/TORONTO (Reuters) - The Caisse de depot et placement du Quebec on Thursday said it would take control of a major cement project in Quebec hit by massive cost overruns, and agreed to a new C$250 million ($192.56 million) round of financing to complete it.
Caisse, already an investor in the project, said it would invest an additional C$125 million with funds managed by BlackRock Alternative Investors which is also investing C$125 million. Quebec’s public pension fund said the new funds would be sufficient to complete the project.
A spokesman for the Caisse said the McInnis Cement project faced between C$400 and $450 million in cost overruns and that it had insisted on a “change of control and a change in management” for the C$1.1 billion cement project in Quebec’s Gaspe peninsula.
The change will give the Caisse a controlling stake in Beaudier Ciment, the controlling shareholder of McInnis, the spokesman said.
Beaudier, the private investment arm of the founding family of Canadian plane and trainmaker Bombardier Inc (BBDb.TO), will now hold a minority stake in Beaudier Ciment.
Laurent Beaudoin, a former Chief Executive of Bombardier Inc and family member, will remain chairman of the McInnis board. The Caisse, however, now controls seven out of the 11 seats.
Caisse re-affirmed the potential profitability of the project and repeated a change to the executive team that was announced last week. Last week, McInnis announced in a statement that Chief Executive Christian Gagnon had left the company and it had started an international search for his replacement.
The project was launched in 2014 with the target of producing up to 2.5 million tonnes of cement a year. It was backed by the Quebec government which contributed C$350 million in investment and loans.
Beaudier contributed C$150 million to the project, local media reported at the time.
(Refiles to correct in paragraph 7 to show that changes to executive team were announced last week, not that the changes were announced on Thursday.)
Reporting by Allison Lampert and Matt Scuffham; Editing by Diane Craft