SNC-Lavalin laid the groundwork for ownership of more bridges, wires and highways on Friday with a $350-million debt financing.
The construction company sold 10-year bonds in the latest well-received debt offering from corporate Canada, with the money raised earmarked for paying down $105-million that comes due next year, and potentially fund the acquisition of infrastructure products.
The new bonds come with a 6.2 per cent interest rate, and the underwriting was led by RBC Dominion Securities and Scotia Capital.
SNC-Lavalin already co-owns projects such as Alberta's Altalink electrical grid, B.C. bridges and Ontario's Highway 407.
"Despite our cash position, we felt it would be prudent to issue debentures because of the upcoming maturity of our outstanding debentures, and the many infrastructure concession investment and business acquisitions opportunities that we foresee," said Pierre Duhaime, the company's president and CEO, in a press release.
The new bonds are rated triple B, which is investment grade, and have a feature that allows investors to redeem the debt at 101 cents on the dollar in the event SNC-Lavalin is taken over. The bonds were sold at a 275 basis point premium to the comparable government of Canada debt.
SNC-Lavalin suffered something of a setback on Monday, as the government of Ontario nixed a nuclear reactor development plan that the company backed. The province said a proposal from a consortium led by Atomic Energy of Canada Ltd. was not "suitable."
This news doesn't mean much to bondholders, but the prospect of losing out on potential profits from the Ontario project knocked back SNC-Lavalin shares in TSX trading.
Andrew Willis