SNC-Lavalin selling resources oil and gas business, completes litigation review

MONTREAL — SNC-Lavalin Group Inc. says it has signed a deal to sell its resources oil and gas business to Kentech Corporate Holdings Ltd. as it moves to further focus its engineering services business.

Financial terms of the deal were not immediately available.

SNC says the oil and gas business will be classified as an "asset held for sale" in its fourth quarter of 2020 and is expected to result in a fair value write down in the range of $260 to $295 million.

At closing, the company says the transaction is expected to generate a gain on the sale in excess of the fair value write down, after accounting for the elimination of a foreign exchange adjustment. A charge of $95 million on the retained resources business will also be taken in the fourth quarter of 2020.

SNC also announced that it has completed a review of its legacy litigation and commercial claims and will increase its provisions by $140 million and reduce its commercial claims receivable by $155 million.

In addition, following a review of its remaining three Canadian light rail infrastructure projects, SNC says it will take a $90-million charge, most of which it says is due to COVID-19 challenges and the decision to not recognize associated revenue at this time.

- This report by The Canadian Press was first published Feb. 9, 2021.