Investors worried about the finances of SNC-Lavalin

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As if SNC-Lavalin had not enough of his legal problems, and policies, is that investors are beginning to wonder if the company will not be soon short of money.

“The pressures on the balance sheet of the company are a major point of discussion with investors for the last several days “, recently wrote the analyst Maxim Sytchev, of National Bank Financial.

According to his calculations, the SNC has lost more than$ 800 Million in market value, ” due specifically to concerns related to the liquidity of the company.

At the beginning of the month, the bank lenders of SNC-Lavalin have agreed to temporarily extend the terms of borrowing of the company, to cause a massive loss of$ 350 Million anticipated in the mining sector, due mainly to a contract in Chile. SNC has not quantified the cost of this change.

The company has assured on Monday that it would not have to issue new shares to bail out, since it can still take$ 1.8 billion of its credit facility.

However, this did not prevent the rating agency Standard & Poor’s to downgrade SNC-Lavalin Tuesday, mainly due to the decline in profits projected. The credit rating of the company is increased from BBB to BBB-, which could increase its borrowing costs.

How much money in bank ?

Even if SNC ensures that it will not need to refinance its debt, analysts are sceptical. Frédéric Bastien, of the firm of Raymond James, notes that in its two recent announcements by financial, the company ” failed to mention how much money he still has in the bank “.

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Some go so far as to wonder if SNC-Lavalin does not have to resolve to sell some of its investments in infrastructure, at a price and depreciated if necessary.

“Rather than issue shares, which would be very dilutive to the shareholders, they would consider likely to sell a portion of these assets “, said yesterday in the Newspaper Yuri Lynk of Canaccord Genuity.

The heart is not worth large-thing

The jewel of SNC in this regard is its involvement of nearly 17% in the highway 407 toll road near Toronto. The analysts attribute to a value of 4.4 to$ 5.4 billion, which represents at least three-quarters of the value current market capitalization of the company.

The participation of SNC-Lavalin’s investment in highway 407 is worth more than its activities of engineering and construction.

The closing price of the stock yesterday, is 34,02 $, the activities of engineering and construction SNC could work no more $ 6.55 per share.

“You can be sure that the potential buyers of the involvement of CNS in the highway 407 monitor the recent difficulties of the company with interest,” said Mr. Bastien.

Let us break up the current value of the action 34,02 $ SNC-Lavalin

(during the closure of the action yesterday)

♦ Investment in highway 407 in Ontario) for $28

♦ Other infrastructure investments 2,60 $

♦ Activities of engineering and construction 3,42 $

Note : We have used the current values of the investments of SNC calculated by the analyst Yuri Lynk of Canaccord Genuity (highway 407) and Maxim Sytchev of the National Bank Financial (other assets).