SNC-Lavalin announced that it will be proceeding with closing the sale of the 10.01% stake in 407 International Inc. (Highway 407 ETR) with Canada Pension Plan Investment Board (CPPIB) following the dismissal by the Ontario Superior Court, Commercial List of the application by Cintra Global S.E. (Cintra). The Court agreed with SNC-Lavalin and CPPIB that Cintra had waived, through an agreement with SNC-Lavalin in 2002, its right of first refusal (ROFR) with respect to the original sale transaction concluded with OMERS in April 2019. SNC-Lavalin currently expects the closing of the sale with CPPIB to occur within the month.

SNC-Lavalin, Cintra and CPPIB have agreed that even if the Court’s decision were to be reversed on appeal, SNC-Lavalin’s sale to CPPIB would not be reversed. Instead, CPPIB and Cintra would adjust the purchaser-owner of the relevant number of shares of Highway 407 ETR as between them.

Based on the terms of the agreement, gross proceeds to SNC-Lavalin from the sale could reach CAD 3.25 billion (US$ 2.45 billion) in aggregate, CAD 3.0 billion (US$ 2.26 billion) payable at the closing date and CAD 250 million (US$ 188.34 million) over a period of 10 years, conditional to certain financial thresholds related to the ongoing performance of Highway 407 ETR. Net proceeds from this transaction will be used to strengthen the balance sheet and more specifically for the execution of the Company’s deleveraging plans.

Prior to the closing of the sale transaction, the current common shareholders of Highway 407 ETR consist of a subsidiary of Cintra, itself a subsidiary of Ferrovial S.A., which owns 43.23% of the common shares, indirectly owned subsidiaries of CPPIB which own approximately 40% of the common shares, and SNC-Lavalin which owns a total of 16.77% of the common shares.

Cintra commenced an application in the Court for a determination of whether it had validly exercised a ROFR with respect to the original OMERS transaction. SNC-Lavalin and CPPIB opposed the application on the basis that Cintra had waived its ROFR. The expedited hearing before the Court took place on June 21, 2019 and the Court’s recent decision confirmed the position of SNC-Lavalin and CPPIB.