SNC-Lavalin tempers bad news with announcement of two huge contracts

In the wake of some unhappy announcements that it had to delay its 2011 financial results, that it had incurred heavy losses on its Libya projects, and that the company had found $35 million that had been misallocated, SNC-Lavalin had some good news to share this week.

On March 1, the Montreal-based engineering-construction company announced it had won an initial $600-million contract related to the re-tubing and feeder replacement at the Darlington nuclear power plant on Lake Ontario.

This initial contract is a “Definition Phase” in which the team will prepare for a later Execution Phase, due to start in four years’ time. The definition phase includes constructing a full-scale mock-up of a reactor to simulate the actual future refurbishment, and developing special tooling for the project. SNC-Lavalin was awarded the contract in a joint venture with Aecon by Ontario Power Generation.

A few days later, on March 5, SNC-Lavalin announced it is doing project management, engineering, procurement and construction management (EPCM) on a $2-billion project by Vale in Sudbury, Ontario. The project, starting in April, is to retrofit Vale’s nickel smelter to reduce its sulphur dioxide emissions by 70% and its dust and metal emissions by up to 40%.

The good news was again tempered with bad, however. The current directors, certain other officers and former employers of the Montreal company, are being served with a class action suit in the Superior Court of Quebec. The $250-million suit is being brought on behalf of people who invested in the company between March 2009 and February this year. SNC-Lavalin denies all liability and says it “intends to vigorously oppose the Motion.”