The Ontario Municipal Employees Retirement System is buying a stake in 407 International Inc. from SNC-Lavalin Group Inc.
Under the deal, which is expected to be completed within two months, SNC-Lavalin will retain 6.76 per cent ownership of Highway 407 ETR. Currently, Cintra Global owns 43.23 per cent and the Canada Pension Plan Investment Board owns 40 per cent.
“This is a truly unique and exceptional asset that we believe has been undervalued by the market for many years,” said Neil Bruce, president and chief executive officer of SNC-Lavalin Group, in a press release. “Through this transaction, we are able to benefit from crystallizing some of this value, while retaining an interest in a successful Canadian infrastructure asset that we are proud to have helped build.
Alongside the sale, SNC-Lavalin has re-negotiated the terms of its $1 billion loan agreement with the Caisse de dépôt et placement du Québec. The loan is supported by Highway 407 ETR shares. The net proceeds from the transaction will be used for the payment of about $600 million under the Caisse loan agreement, as well as for the execution of the company’s deleveraging plans.
“Our investment in Highway 407 ETR has provided excellent returns over the years” said Stephanie Vaillancourt, executive vice-president of capital and treasurer the SNC-Lavalin.“It is the first all-electronic open access tolled highway in the world, stretching 108 km east-to-west in the heart of the GTA, Canada’s largest urban economic and population centre.
“Our capital business is ideally positioned to invest in and realize such projects, with the extensive experience and collaboration of our engineering and project colleagues.”