SNC-Lavalin will sell its activities in the gas and oil sector to the multinational Kentech Corporate Holdings, in order to reduce its risks and focus on its professional engineering services as well as project management.
Even if the precise amount of this transaction has not been specified, the Montreal engineering firm believes that it should generate a slight gain on paper. Its hydrocarbon assets will be classified as a charge in the fourth quarter of 2020 with a “reduction in fair value in the range of $ 260 million to $ 295 million, made up almost entirely of non-cash items,” the company said. . However, in the spring of closing the sale in the second quarter of 2021, the transaction is expected to generate a gain greater than the reduction in fair value, with the elimination of losses related to currency conversions.
“The sale of the oil and gas business further simplifies our business and reduces the risks associated with it, while allowing us to focus more on growing our core Engineering Services business line which has high potential. ”Said Ian L. Edwards, President and CEO of SNC-Lavalin.
“Over the past 18 months, we have made significant progress in advancing our strategy and reducing business risk. Following the implementation of our new strategy in July 2019, we have significantly improved our cash flow from operating activities and demonstrated that our Engineering Services business line is resilient and can deliver strong results. “, he added.
With the liquidation of the oil and gas activities, SNC-Lavalin’s Resources segment essentially contains only mining and metallurgy service projects. A charge of $ 95 million for the activities of the Resources sector will therefore be recorded for the fourth quarter of 2020.