February 28, 2011 / 3:09 PM / in 7 years

OMERS fund working with SNC on Canada nuclear bid

TORONTO (Reuters) - The Ontario Municipal Employees Retirement System said on Monday it is working with engineering and construction firm SNC-Lavalin on a bid to buy the commercial reactor business of Canada’s nuclear agency.

SNC, with the backing of OMERS, one of Canada’s largest pension funds, is eyeing Atomic Energy of Canada Ltd’s Candu unit, which provides nuclear technology and services for electricity generating stations, OMERS Chief Executive Michael Nobrega said on Monday.

He did not say how the bid was worth, but added that the process to buy the commercial services unit was down to two bidders -- SNC and Bruce Power, a partnership that operates a nuclear generating station in the province of Ontario.

The Bruce Power partnership includes uranium producer Cameco Corp and pipeline company TransCanada Corp.

SNC shares were down 1.12 percent at C$56.44 on the Toronto Stock Exchange around midday on Monday.

Canada’s Conservative government put AECL’s Candu reactor division up for sale in 2009 after years of huge annual subsidies and a poor performance from the business. It plans to retain ownership of AECL’s research and medical isotope business and place it under private management.

“The federal government will keep things like Chalk River -- isotopes -- if it wants to do that. The federal government will keep waste, the federal government will keep major research,” Nobrega told reporters in Toronto after the fund released its 2010 results.

The aging Chalk River nuclear plant in eastern Ontario is a major producer of isotopes used in medical procedures such as cancer testing.


OMERS said earlier in the day the value of its net assets rose 11.5 percent last year to C$53.3 billion, helped by stronger global financial markets.

The fund said its total rate of return for 2010 was 12.01 percent, compared with 10.6 percent in 2009.

OMERS, which invests on behalf of more than 400,000 active and retired municipal employees in the province of Ontario, said it continued to face a shortfall in its pension funding obligations as a result of the economic downturn in 2008, when the value of its assets dropped by 15.3 percent.

OMERS had a funding deficit last year of C$4.5 billion, compared with a deficit of C$1.5 billion in 2009.

The fund said that, based on its asset mix policy and active investment strategy, it should be able to generate average annual returns of between 7 percent and 11 percent over the next five years. That, combined with temporary contribution increases and benefit reductions, would return the plan to surplus between 2015 and 2020.

The fund also said it is pushing forward with various programs to increase its assets, such as allowing members to invest their registered retirement savings in the OMERS Fund, effective January 1, 2011. It said other specific capital-raising programs will be launched in 2011.

Additional reporting by Pav Jordan; editing by Rob Wilson

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