The C$392 billion ($296 billion) Canada Pension Plan Investment Board is set to become the controlling shareholder in a Toronto toll road after an Ontario court ruled in its favor, allowing it to buy a stake from embattled engineering firm SNC-Lavalin Group Inc.
SNC-Lavalin agreed to sell a 10.01% stake in 407 International Inc., the entity that owns the highway, for as much as C$3.25 billion in cash to the Canadian pension fund, the Montreal-based engineering company said in a statement Wednesday.
The court ruling marks the end of a conflict among the shareholders of the 67-mile highway. SNC announced in April it had agreed to sell the stake to the C$95 billion Ontario Municipal Employees' Retirement System. Spanish builder Ferrovial SA and CPPIB stepped in to exercise their rights to match the OMERS offer. The court ruled that Ferrovial had waived its right of first refusal through a prior agreement, paving the way for CPPIB to increase its stake to 50.1% from 40%. Ferrovial's Cintra unit will still own 43%, with SNC's stake cut to 7% following the sale.
SNC-Lavalin will get C$3.25 billion in gross proceeds, of which C$3 billion will be paid at the closing date and C$250 million over 10 years, conditional on financial results of the tollway, SNC said in the statement.
Net proceeds will be used to reduce SNC's leverage. SNC's stock plunged to a 15-year low Tuesday after its largest shareholder said the firm's performance is of "growing concern" following a series of profit warnings.