SNC-Lavalin will sell its oil and gas activities 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 exact amount of the deal is not specified, Montreal Engineering believes it should make slight gains on paper. The company said its hydrocarbon assets would be classified as expenses in the fourth quarter of 2020 with “a decrease in the fair value in the range of $ 260 million to $ 295 million, consisting almost entirely of non-cash items.” However, in the spring, when the sale ends in the second quarter of 2021, the deal is expected to yield greater gains from lower fair value, while eliminating losses related to currency conversions.
Edwards, president and CEO of the company, Ian L Edwards, CEO of SNC-Lavalin.
“Over the past 18 months, we have made significant progress in developing our strategy and reducing business risks. After implementing our new strategy in July 2019, we significantly improved cash flow from operational activities and demonstrated that our engineering services business area is flexible and can deliver strong results.”
With the liquidation of oil and gas activities, SNC-Lavalin resource sector mainly contains only mining and mining services projects. Consequently, an amount of $ 95 million will be recorded for resource sector activities for the fourth quarter of 2020.
Investors seem to like the announcement. In the wake of the announcement, SNC-Lavalin stock jumped 11.06% on the Toronto Stock Exchange, to close at $ 25.31, up $ 2.52.