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MONTREAL – Already at the centre of a political storm in Ottawa, the montreal company SNC-Lavalin must now face a downgrade of its credit rating by the firm Standard & Poor s.
The credit rating of SNC-Lavalin is increased from BBB to BBB minus, Tuesday, in the late afternoon.
In a press release, the rating agency explains that the change is in part due to downward revisions of financial forecasts (profit and cash flows) of the Group SNC-Lavalin for the next two years.
“We now expect to be free cash flow negative in 2019, resulting in a slowdown of the improvement in the ratio of credit to 2020”, one can read in a press release.
In January of last year, SNC-Lavalin has surprised investors by revealing more bad news: significant losses arising out of a mining contract, arbitration decision unfavorable for a project in Australia, as well as a write-off of $ 1.2 billion of its oil & gas division, in particular because of the”aggravation” of relations between Canada and saudi Arabia.
On Tuesday, Standard & Poor’s has stated that the accusations of fraud and corruption in Libya as well as the risk of a potential slowdown in the global economy, also contribute to this discount.
“There is the possibility that, if the company is found guilty, it is prohibited to bid for federal contracts granted by the government of Canada for a maximum of 10 years, which would weaken its competitive position in Canada, which represents a significant portion of its activity and of its profits,” reads one also.
In Ottawa, for nearly a week, the Trudeau government was plunged into a political crisis after revelations that the former minister of Justice, Jody Wilson-Raybould, had been pressured to ensure that an agreement is found in order to avoid that the company is not subjected to a trial for corruption and fraud.
SNC-Lavalin, which employs 52,000 people in the world, is accused of having paid millions of dollars in bribes to high-ranking Gaddafi regime in Libya to win contracts between 2001 and 2011.