SNC-Lavalin woes see $5.2 billion stock wipeout, bonds spread widen

SNC-Lavalin Group Inc., the embattled Canadian engineering firm, is hitting investors from both sides now: stocks and bonds.

Shares of Montreal-based SNC tumbled another 9 per cent Tuesday after the firm’s largest shareholder, the Caisse de dépôt et placement du Québec, said that SNC must build a culture of execution and take a “major step up in discipline” to implement its new strategy.

The stock fell to a 15-year low, bringing the year-to-date plunge to 65 per cent, the second-worst performer on Canada’s benchmark S&P/TSX Composite Index. SNC-Lavalin’s $ 300 million (Canadian) of 3.235 per cent notes due 2023 were quoted Tuesday at the widest spread over government bonds since they were issued in February last year.

Here’s a look at the impact SNC-Lavalin’s corporate woes have had on investors this year:

SNC-Lavalin’s stock value has eroded by $ 5.2 billion this year after the company issued three profit warnings, wrote down the value of its Middle East energy business and lost a contract in Chile valued at $ 260 million (U.S.). The company also found itself at the centre of Canada’s biggest political crisis in years when Prime Minister Justin Trudeau tried to help the company avoid a criminal trial over its dealings in Libya.

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Notes due in 2023 are quoted at about 230 basis points over Canadian benchmark government debt Tuesday, compared with about 172 basis points in July, according to bid prices at Bloomberg.

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