SNC-Lavalin Group Inc. has signed a deal to sell the bulk of its stake in Ontario91裸聊视频檚 407 toll highway operator for $3.25 billion, some of which will go toward a loan from Quebec91裸聊视频檚 pension fund.

The OMERS pension plan will buy a 10.01 per cent stake in 407 International Inc., reducing SNC-Lavalin91裸聊视频檚 interest to 6.76 per cent, according to an agreement announced Friday.

For more than six months, SNC-Lavalin has been mulling a partial sale to help pay down its loan from the Caisse, Quebec91裸聊视频檚 pension fund operator. The two-year-old loan stipulates that the company must keep its headquarters in Montreal until 2024, when the balance would be paid off.

A spokesman for the Caisse 91裸聊视频� by far the largest SNC-Lavalin shareholder at 20 per cent 91裸聊视频� said the sale does not alter that condition.

SNC-Lavalin had previously paid off $500 million of the $1.5-billion loan, and plans to use the proceeds from the 407 deal to pay down another $600 million upon closing, according to the company.

91裸聊视频淭his is a truly unique and exceptional asset that we believe has been undervalued by the market for many years,91裸聊视频� SNC chief executive Neil Bruce said in a statement.

91裸聊视频淭hrough 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.91裸聊视频�

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Analyst Yuri Lynk of Canaccord Genuity said in a research note that the sale has the effect of 91裸聊视频渋mmediately cleaning up91裸聊视频� SNC91裸聊视频檚 balance sheet.

OMERS will pay $3 billion to SNC on the closing of the deal and an additional $250 million over 10 years, conditional on certain financial targets related to the performance of the toll highway.

The OMERS agreement with SNC is subject to certain rights of 40791裸聊视频檚 other shareholders, including rights-of-first refusal.

The other owners of the toll highway include a subsidiary of Ferrovial S.A., with a 43.23 per cent stake, and the Canada Pension Plan Investment Board with 40 per cent.

The deal is expected to close within two months.

Analysts say the transaction will yield net proceeds of $2.8 billion for SNC-Lavalin, assuming a tax rate of 13 per cent. The deal values the company91裸聊视频檚 total stake at about $27 per share, below the consensus of $28, according to analyst Benoit Poirier of Desjardins Securities.

He estimates the firm will put between $1.2 billion and $1.4 billion toward share buybacks over the long term.

91裸聊视频淏ottom line, while the valuation for SNC91裸聊视频檚 stake in Highway 407 is below expectations, we believe the net proceeds should help SNC to deleverage and benefit from the stock91裸聊视频檚 current valuation,91裸聊视频� Poirier said in a note to investors.

The company91裸聊视频檚 shares have hovered near 10-year lows of around $34 since Feb. 11, when it slashed its profit forecast for 2018 by more than 40 per cent and halted all bidding on future mining projects.

That reduced guidance came two weeks after it halved its forecast from November amid a diplomatic feud between Canada and Saudi Arabia 91裸聊视频� a key source of oil and gas revenue 91裸聊视频� and delays on its project with Codelco, Chile91裸聊视频檚 state-owned copper mining company, which has since cancelled the contract.

Friday91裸聊视频檚 deal comes as the SNC-Lavalin affair in Ottawa continues to simmer following accusations that top government officials pressured former attorney general Jody Wilson-Raybould to veto federal prosecutors91裸聊视频� move to prosecute the company on corruption charges instead of negotiating a remediation agreement.

Christopher Reynolds, The Canadian Press

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