SNC-Lavalin seeks approval to IPO a 35% stake in Altalink

Altalink and SNC-Lavalin on Dec. 18 filed for approval with the Alberta Utilities Commission (AUC) to reorganize the ownership of Altalink through an initial public offering (IPO).

SNC-Lavalin currently is the sole investor of Altalink and under the proposed transaction would divest 35% of its ownership through the IPO. On Sept. 30, SNC announced its board of directors had authorized the company to initiate a process to sell an equity stake in Altalink. At the time, the company said it would explore all options for the equity sale, including a private sale, strategic partnership or public market alternatives.

“RBC and Morgan Stanley are overlooking the process,” a spokesperson for SNC told TransmissionHub on Dec. 23. “We are looking to sell 100% of Altalink or IPO a minority stake. We will do our best to maximize value [for] our shareholders.”

In the application (Proceeding No. 2983 and Application Nos. 1610183 and 1610184), Altalink and SNC-Lavalin proposed to transfer all limited partnership units held by SNC-Lavalin Transmission Ltd. (T1), SNC-Lavalin Transmission II (T2) and SNC-Lavalin Transmission III (T3) in Altalink Holdings to a newly incorporated Alberta corporation.

T1 has a 49.995% stake in Altalink Holdings, T2 has a 26.92% stake and T3 has a 23.075% stake.

Under the proposed transaction,

(1) T1, T2 and T3 will each transfer the limited partnership units they hold in AltaLink Holdings to a newly incorporated Alberta corporation (Newco) in consideration for Newco issuing promissory notes and common shares of the capital of Newco to each of T1, T2, and T3;

(2)  942064 Alberta Ltd. (942064), the direct owner of SNC Share Purchaser, will transfer all of the shares it holds in the capital of SNC-Lavalin Energy Alberta to Newco in consideration for Newco issuing to 942064 common shares of the capital in Newco;

(3)  942064 will transfer all of the common shares it holds in Newco’s capital to T1 in consideration for T1 issuing shares of its capital to 942064;

(4)  an IPO of up to 35% of the common shares in Newco’s capital will then be undertaken; and

(5)  part of the proceeds received by Newco from the IPO upon its completion will be used to repay each of T1, T2, and T3 the indebtedness evidenced by the promissory notes.

After completion of the IPO, the public will own up to 35% of the common shares of Newco, and T1, T2 and T3 collectively will own no less than 65%. 

SNC-Lavalin is targeting growth in key engineering and construction markets with a focus on the resources sector, including oil and gas, mining and metallurgy, and environment and water, the company said in September. It will also seek sustained growth in its existing clean power and infrastructure engineering and construction businesses, while moving forward with its fully integrated services strategy, including project financing, engineering, construction and operations and maintenance.

This article was modified at 5:36 p.m. Eastern to reflect comments of the SNC spokesperson. 

About Rosy Lum 525 Articles
Rosy Lum, Analyst for TransmissionHub, has been covering the U.S. energy industry since 2007. She began her career in energy journalism at SNL Financial, for which she established a New York news desk. She covered topics ranging from energy finance and renewable policies and incentives, to master limited partnerships and ETFs. Thereafter, she honed her energy and utility focus at the Financial Times' dealReporter, where she covered and broke oil and gas and utility mergers and acquisitions.