The federal government finally announced Wednesday a deal to divest itself of Atomic Energy of Canada Ltd. and get out of the business of subsidizing nuclear reactor sales and servicing.

Joe Oliver, the minister of natural resources, said at a news conference in Toronto that the Crown corporation's Candu reactor business has been sold to engineering giant SNC-Lavalin Group of Montreal, ending a process that has been in the works since 2009.

The sale price was $15 million, but the government will have opportunity to get royalties down the road because it's keeping intellectual property rights, Oliver said. However, the government will also provide SNC up to $75 million to complete development of a new reactor called Enhanced Candu 6.

The union for AECL workers condemned the sale, saying the deal will result in a "hollowed out company" and might cost thousands more jobs among the corporation's suppliers.

"It may contribute to a brain drain not seen since the Avro Arrow as engineers, scientists and others evaluate their long-term careers with the company," Michael Ivanco, vice-president of the Society of Professional Engineers and Associates, said in a release.

SNC will create a new division called Candu Energy that will include the AECL reactor division's three former business lines. At least 1,035 jobs will be kept as SNC assumes ownership, but the number is expected to be closer to 1,200, AECL chief executive Hugh MacDiarmid said in an internal memo to staff. That means between 800 and 900 layoffs.

"We are shocked and angry that the Harper government conducted this sale behind closed doors without any input from the Canadian public or Parliament," Ivanco said. "They jammed legislation through the budget that gave cabinet the right to make decisions instead of Parliament, and now we see the results."

Billions in subsidies

The Organization of Candu Industries, which represents more than 165 Canadian companies supplying goods and services for Candu reactors in domestic and export markets, applauded the move.

"As one of Canada's premier and one of the top international engineering and construction companies, SNC-Lavalin's purchase of AECL signals the beginning of an exciting new era in Canada's nuclear sector," it said.

AECL has been a headache for successive federal governments and has cost Canadian taxpayers about $1.2 billion over the past several years in subsidies. It has also faced major cost overruns at key projects in recent years while struggling to find a buyer.

"This is a necessary step to strengthen Canada's nuclear industry while reducing taxpayers' exposure to nuclear commercial risks," the government said in a release.

The federal New Democratic Party critic, Nathan Cullen, and Green Party Leader Elizabeth May both said the price was too low. Each used "firesale" to describe the deal.

The deal is expected to be made final in early fall 2011.

Bidders backed out

In May 2009, the Conservatives announced plans to spin off AECL's commercial reactor business from its research division.

The announcement coincided with what turned into a lengthy shutdown of the company's research reactor at Chalk River, Ont., which caused a worldwide shortage of the medical isotopes used to detect cancer and heart ailments.

An earlier shutdown in late 2007 also strained the global isotope supply and ended only after Parliament voted to bypass the nuclear safety regulator's closure order.

SNC was the sole bidder to meet Ottawa's conditions for buying the financially troubled Crown corporation. Bruce Power, which runs the Bruce nuclear plant in Southwestern Ontario, withdrew in January. The Ontario municipal employees' pension plan, OMERS, had been a partner with SNC in its bid until it also withdrew in May.

AECL has bid for the two new reactors Ontario wants to build, but the province won't make a decision until the company's future is certain.

Ontario Finance Minister Dwight Duncan told reporters Tuesday that he doesn't expect to sign any deals before the Oct. 6 provincial election.

The Ontario government has pressed Ottawa to help underwrite any possible cost overruns on those two nuclear reactors, which could cost billions of dollars to build. The province's energy minister, Brad Duguid, said Wednesday that the federal Tories have committed to backing energy projects in other parts of the country — including a loan guarantee for the $6.2-billion Lower Churchill hydroelectric project in Labrador — and should treat Ontario equally.

"The last thing we want to do is see lack of support from the federal side taking jobs away from Ontario when it comes to the energy sector," Duguid said.

Ottawa to keep liabilities 

In New Brunswick, the Opposition Liberals said earlier this week that the possible sale of Atomic Energy of Canada could have major repercussions for the province as it grapples with cost overruns at its Point Lepreau nuclear power plant.

The provincial Tory government has been looking to Ottawa to cover roughly $1 billion in additional costs incurred during the Lepreau refurbishment, which is being overseen by AECL.

Ottawa said Wednesday it will retain responsibility for liabilities related both to Point Lepreau and the Bruce power station in Ontario, which is also being refurbished but is three years behind schedule and at least $2 billion over budget.

AECL has been struggling to modernize its technology to keep up with rivals Areva, Westinghouse, Hitachi and others.

The company lost $800 million last year, and has not sold a new reactor since the 1990s. However, some reports said AECL's business was hindered by a cap on new contracts that the government had ordered during the sale process, to avoid having the company burdened with new liabilities.

With files from The Canadian Press