SNC-Lavalin shares fall to lowest level since 2005 as Caisse demands answers
Shares of SNC-Lavalin Inc. plummeted to the lowest level in nearly 15 years Tuesday in reaction to its largest shareholder, the Caisse de depot et placement du Quebec, warning that the embattled engineering firm had to move to emergency mode to improve its project execution.
The Montreal-based company's shares fell to a low of $16.10 in early trading on the Toronto Stock Exchange and were down nine per cent at $16.21 around midday.
Caisse CEO Michael Sabia shone the spotlight on SNC-Lavalin Monday during a discussion about the Quebec pension fund manager's results for the first half of 2019. It posted a modest return of 6.1 per cent, well below that of 7.5 per cent of its reference portfolio.
The Caisse booked a $700-million loss from its SNC investment during the first six months of the year and Sabia's impatience was clearly evident.
Although he has said a few times that the Caisse is and will remain "a long-term investor in SNC-Lavalin during this turbulent period," he said that the engineering giant "must move quickly and must focus on execution."
Unwilling to comment on the risk of a hostile takeover bid by foreign investors, Sabia acknowledged that the Caisse remains watchful and that SNC is important to Quebec and to Canada and "the engineering ecosystem in Canada."