/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR
DISSEMINATION IN THE UNITED
STATES./
- Creates a $12.1 billion global
professional services and project management company with 53,000
employees
- Significantly improves SNC-Lavalin's overall margins, and
further balances the business portfolio
- Enhances SNC-Lavalin's global position and addressable market
in infrastructure, rail & transit, and nuclear
- Combines two highly complementary businesses and increases both
geographic reach and customer diversification globally
- SNC-Lavalin estimates a purchase price multiple of 9.8x for the
trailing 12-month adjusted EBITDA1 post
synergies2 and including the pension
deficit3
- Expected to deliver approximately $120
million of cost synergies by the end of the first full
financial year after the effective date
- Improves balance sheet efficiency by leveraging equity stake in
Highway 407 ETR, while maintaining our investment grade rating
MONTREAL, April 20, 2017 /CNW Telbec/ - SNC-Lavalin
Group Inc. (TSX: SNC) ("SNC-Lavalin" or the "Corporation") is
pleased to announce that it has reached an agreement with WS Atkins
plc ("Atkins"), approved by the boards of directors of both
companies, on the terms of a cash acquisition by which SNC-Lavalin
will acquire the entire issued and to be issued share capital of
Atkins for £20.80 per share in cash, representing an aggregate cash
consideration of $3.6 billion*.
Headquartered in the UK, Atkins is one of the world's most
respected consultancies in design, engineering and project
management, with a leadership position across the infrastructure,
transportation and energy sectors. Tracing its roots back to 1938,
Atkins today has 18,000 employees with revenues of approximately
£2.0 billion in 2016, and is geographically diversified in the US,
Middle East and Asia, together with a leading position in the
UK and Scandinavia.
"We are very pleased to announce this proposed acquisition
that is fully aligned with our growth strategy, creating a global
fully integrated professional services and project management
company – including capital investment, consulting, design,
engineering, construction, sustaining capital and operations and
maintenance. By combining two highly complementary businesses, we
will increase our depth and breadth of services to position us as a
premier partner to public and private sector clients," said
Neil Bruce, President & CEO. "It
also creates new revenue growth opportunities in key geographies by
positioning us to capitalize on increased cross-selling and the
opportunity to win and deliver major projects in new regions. I
look forward to welcoming Atkins' employees into our combined
company. Together, we will become part of a larger global
organization that will open the door to new opportunities for
further growth and development."
Business Rationale
- Brings to SNC-Lavalin new and complementary capabilities in
three of its four sectors, and with essentially no overlap in its
service offering, with significant presence in Europe, UK, Scandinavia, the US, Middle East and Asia.
- Further reduces SNC-Lavalin's business risk profile with
ongoing revenue streams from framework and master service
agreements for consulting and advisory services, as well as fixed
fee consultancy and design projects.
- Improves SNC-Lavalin's overall margins by adding a significant
amount of consistent comparatively high-margin revenue.
- Significantly increases SNC-Lavalin's global customer base and
expands and deepens the areas of the market that the combined
entity can service.
- Uniquely positions the combined entity to capitalize on the
significant investment in infrastructure projects globally but
principally in North America.
- Positions the combined entity to win wider nuclear work;
maintenance and decommissioning in particular, as one of the most
compelling nuclear services firms.
- Deepens SNC-Lavalin's project management, design, consulting,
and engineering capabilities to create a more comprehensive
end-to-end value chain for the combined entity – including capital
investment, consulting, design, engineering, construction,
sustaining capital and operations and maintenance.
- Creates a more agile, responsive and competitive combined
organization with enhanced scale and vertical integration that can
better meet client needs and create cross-selling
opportunities.
- Combines two strong and compatible management teams, with the
proven experience to execute a successful and timely integration
plan. SNC-Lavalin has a strong track record of successful
integrations, combining best practices from each organization and
achieving synergy targets.
- As a Canadian global champion headquartered in Montreal, the acquisition would solidify
SNC-Lavalin's position as one of the largest fully integrated
professional services firms globally.
SNC-Lavalin considers that Atkins' employees will be a key
factor in maximizing the opportunities that the acquisition will
present and the executive leadership of the combined entity will
also aim to retain the best talent across Atkins and
SNC-Lavalin.
As part of the integration process, a review of the Atkins
businesses will be completed with the Atkins leadership team to
determine any organizational and structural changes that should be
implemented to benefit the combined entity. SNC-Lavalin does not
expect this integration review to have a material impact on the
continued employment of Atkins' employees.
Consistent with the extensive succession planning work completed
by Atkins and the Atkins Directors, Heath
Drewett, the current Group Finance Director and Executive
Director of Atkins will, upon successful completion of the
acquisition, be promoted to lead Atkins within the combined entity.
Heath Drewett will report into
SNC-Lavalin's President and Chief Executive Officer and become a
member of SNC-Lavalin's executive committee.
James Cullens, Group Director
Human Resources & Marcomms and Executive Director of Atkins,
will remain with the combined entity and support SNC-Lavalin with
key integration and people-related matters following the successful
completion of the acquisition. James' extensive experience, both at
Atkins and in his prior career, is aligned with the needs of the
combined entity. It is therefore anticipated that, subject to
mutual agreement, towards the end of the year, James will assume
the position of Executive Vice-President, Human Resources, for the
combined organization.
Financial Highlights
Under the terms of the acquisition, each Atkins shareholder will
be entitled to receive £20.80 in cash for each Atkins share.
The acquisition represents an enterprise value of $4.2 billion, including the pension deficit. This
represents an estimated purchase price multiple of 9.8x for the
12-month adjusted EBITDA1 post synergies2 and
including pension deficit3.
The acquisition is expected to be immediately accretive to
SNC-Lavalin's consolidated and E&C adjusted earnings per share
before any revenue and cost synergies.
The acquisition will create growth and expansion of services and
revenue. It is also expected to deliver approximately $120 million in cost synergies in both current
organizations by the end of the first full financial year after the
effective date, that would include, for example eliminating
corporate and listing costs, optimizing corporate functions and
shared services, streamlining IT systems, and office consolidation
where appropriate.
The acquisition financing structure preserves SNC-Lavalin's
balance sheet strength and leverages SNC-Lavalin's equity stake in
the Highway 407 ETR, while retaining its equity ownership. The
acquisition will be funded through a combination of equity and debt
issuance, and supported by Caisse de dépôt et placement du Québec
("CDPQ"), SNC-Lavalin's largest shareholder. The funding includes a
$1.5 billion loan from CDPQ, an
$800 million public bought deal
offering, a $400 million private
placement with CDPQ, as well as a £300 million term loan, and an
approximately £350 million draw on our current credit facility.
Additionally, SNC-Lavalin expects to maintain its
investment-grade rating following the closing of the
acquisition.
Acquisition Financing
- $1.5 billion loan from CDPQ to
SNC-Lavalin Highway Holdings Inc. (the entity that holds
SNC-Lavalin's 16.77% interest in Highway 407ETR through 407
International Inc.).
- $800 million public subscription
receipts on a bought deal basis backstopped by an $800 million unsecured bridge credit facility
with a syndicate of North American banks.
- $400 million privately placed
subscription receipts with CDPQ backstopped by a $400 million unsecured bridge credit facility
with CDPQ.
- Approximately £350 million to be drawn under the Corporation's
existing $4.25 billion syndicated
credit facility backstopped by a £400 million unsecured bridge
credit facility with a syndicate of North American banks.
- A new £300 million unsecured term loan with a syndicate of
North American banks.
SNC-Lavalin Highway Holdings Loan with CDPQ
Concurrently with the announcement of the acquisition,
SNC-Lavalin Highway Holdings Inc. ("SNC-Lavalin Highway Holdings")
and CDPQ entered into a loan agreement in the original principal
amount of $1.5 billion. This loan is
secured by the full value of SNC-Lavalin Highway Holdings' shares
and the cash flows generated from such shares. The loan has been
structured to be of a non-recourse nature as against the
Corporation.
Public Offering of Subscription Receipts on a Bought Deal
Basis
To finance the payment of a portion of the purchase price and
related expenses, SNC-Lavalin has entered into an agreement with a
syndicate of underwriters co-led by RBC Capital Markets, TD
Securities and BMO Capital Markets (collectively, the
"Co-Lead Underwriters") to sell, on a bought deal basis,
subscription receipts (the "Subscription Receipts") of SNC-Lavalin
from treasury at a price of $51.45
per Subscription Receipt (the "Offer Price"). The agreement with
the Co-Lead Underwriters includes the issuance of 15,550,000
Subscription Receipts for gross proceeds of $800 million (the "Offering"). In addition, the
underwriters have been granted an over-allotment option,
exercisable in whole or in part at the Offer Price for a period of
30 days from the closing date of the Offering, for additional gross
proceeds of up to approximately $80
million. The Subscription Receipts will be offered in all
provinces of Canada, pursuant to a
prospectus supplement to SNC-Lavalin's short form base shelf
prospectus dated March 13, 2017 to be
filed in each of the provinces of Canada by SNC-Lavalin.
The proceeds from the Offering will be held in escrow pending
the completion of the acquisition. If the acquisition is completed
on or prior to 11:59 pm (London, UK time) on July 31, 2017 (or such later date as SNC-Lavalin
and Atkins may agree for purposes of the acquisition closing,
subject to regulatory consents and court approvals, which date
shall be no later than October 27,
2017), the net proceeds will be released to the Corporation
and each holder of a Subscription Receipt will receive, without
additional consideration and without further action, one common
share of SNC-Lavalin (the "Common Shares") for each Subscription
Receipt held upon closing of the acquisition together with, without
duplication, an amount, if any, equal to the amount per Common
Share of any dividends for which record dates have occurred during
the period from the date of the Offering closing to the date
immediately preceding the date of the acquisition closing, less any
applicable withholding taxes. If the acquisition does not occur on
or prior to 11:59 pm (London, UK time) on July 31, 2017 (or such later date as SNC-Lavalin
and Atkins may agree for purposes of the acquisition closing,
subject to regulatory consents and court approvals, which date
shall be no later than October 27,
2017), if the proposed scheme of arrangement in respect of
the acquisition is not approved by the requisite majority of Atkins
shareholders or not court sanctioned, or lapses or is withdrawn; or
if the Corporation advises the Co-Lead Underwriters or announces to
the public that it does not intend to proceed with the acquisition,
the holders of Subscription Receipts will receive a cash payment
equal to the offering price of the Subscription Receipts plus their
pro rata share of the interest actually earned on the escrowed
funds during the term of the escrow. 50% of the underwriters' fee
in the aggregate amount of $16
million, assuming no exercise of the over-allotment option,
representing 4% of the aggregate gross proceeds of the Offering,
will be paid upon closing of the Offering and the other 50% will be
paid upon closing of the acquisition.
The issuance of the Subscription Receipts and underlying Common
Shares pursuant to the Offering are subject to customary approval
of the Toronto Stock Exchange. Closing of the Offering is expected
to occur on or about April 27,
2017.
Neither the Subscription Receipts nor the underlying Common
Shares offered have been, and they will not be, registered under
the U.S. Securities Act of 1933 (the "U.S. Securities Act"), as
amended, and such securities may not be offered or sold in
the United States, absent
registration or an applicable exemption from registration. This
press release shall not constitute an offer to sell or the
solicitation of an offer to buy the Subscription Receipts or the
underlying Common Shares. The offering or sale of the Subscription
Receipts and the underlying Common Shares shall not be made in any
jurisdiction in which such offer, solicitation or sale would be
unlawful.
Concurrent Private Placement of Subscription Receipts
SNC-Lavalin has also entered into a subscription agreement with
CDPQ pursuant to which SNC-Lavalin and CDPQ have agreed that CDPQ
will purchase on a "private placement" basis in
Canada, 7,775,000 Subscription Receipts (the "Placement
Subscription Receipts") at a price of $51.45 per Placement Subscription Receipt for
gross proceeds to SNC-Lavalin of $400
million upon closing (the "Concurrent Private Placement").
Upon closing of the acquisition, CDPQ will be entitled to a
non-refundable capital commitment payment equal to 4% of the
aggregate purchase price for the Placement Subscription Receipts
for which it has subscribed.
Completion of the Concurrent Private Placement is subject to a
number of conditions, including the concurrent closing of the
Offering. Completion of the Offering is conditional upon the
concurrent closing of the Concurrent Private Placement.
Other Credit Facilities and Arrangements
Concurrently with the announcement of the acquisition, the
Corporation entered into a new £300 million unsecured term loan
with a syndicate of North American banks and the Corporation
intends to draw approximately £350 million under its existing
$4.25 billion syndicated credit
facility to pay the balance of the purchase price and
acquisition-related costs.
The various elements of the Corporation's financing of the
acquisition are collectively designed to ensure compliance with the
"certain funds" requirements of the UK City Code on Takeovers and
Mergers.
As neither the Offering nor the Concurrent Private Placement is
being made on a "certain funds" basis, concurrently with the
announcement of the acquisition, the Corporation also entered into
(i) an $800 million unsecured bridge
credit facility with a syndicate of North American banks to
backstop the Offering, and (ii) a $400
million unsecured bridge credit facility with CDPQ to
backstop the Concurrent Private Placement.
Each of the Corporation's existing Syndicated Credit Facility,
the new Term Loan and the backstop facilities for the Offering and
the Concurrent Private Placement contain customary representations,
warranties, conditions precedent, covenants, a leverage ratio and
events of default.
All of the above elements of the acquisition financing plan,
including the nature of the SNC-Lavalin Highway Holdings Loan, have
been designed and structured with a view to preserving
SNC-Lavalin's investment grade rating.
Advisors
RBC Capital Markets is acting as financial adviser and corporate
broker to SNC-Lavalin. SNC-Lavalin's legal adviser is Norton Rose Fulbright. SNC-Lavalin's accountants
are Deloitte LLP. Maitland acted
as financial communications consultants.
OFFER DETAILS AND TIMETABLE
It is intended that the acquisition will be implemented by means
of a Court-sanctioned scheme of arrangement under Part 26 of the
U.K. Companies Act 2006. The purpose of the Scheme is to provide
for SNC-Lavalin to indirectly become the owner of the entire issued
and to be issued share capital of Atkins.
Details of the proposed acquisition will be sent to Atkins
shareholders within 28 days of the date of this announcement
(unless the Panel on Take-overs and Mergers under the U.K.'s City
Code on Take-overs and Mergers agrees otherwise). Subject, amongst
other things, to the satisfaction or waiver of the conditions, the
approval of the scheme of arrangement by the Atkins shareholders,
the receipt of applicable regulatory approvals and the Court's
sanction of the scheme of arrangement, it is expected that the
acquisition will be completed in the third quarter of 2017.
All relevant documentation will be made available on
SNC-Lavalin's website at www.snclavalin.com.
2017 OUTLOOK UPDATE AND FIRST QUARTER
SNC-Lavalin's first quarter results, to be announced on
May 4, 2017, remain broadly in-line
with management's expectations. SNC-Lavalin is also reaffirming its
full year 2017 outlook provided on March 2,
2017 with respect to adjusted diluted EPS from E&C of
$1.70 to $2.00, without taking into
account the proposed acquisition or related
financing4.
All dollar figures in this press release are Canadian dollars
unless otherwise indicated.
* Based on the above offer price of £20.80 per Atkins share,
multiplied by 100,110,799 Atkins shares in issue (excluding
4,341,000 ordinary shares held in treasury) as specified in the
Rule 2.9 announcement published by Atkins on April 3, 2017 and by the GBP: CAD exchange rate
of 1.7229 (as of 5.00 p.m. U.K. time
on April 19, 2017 as per
Bloomberg).
1 Adjusted EBITDA of Atkins calculated as reported
underlying EBITDA of Atkins during the twelve month period ended
September 30, 2016 of £181M. See the
Non-IFRS Measures section included in this news release for a
reconciliation of underlying EBITDA of Atkins to operating
profit.
2 Expected identified cost synergies of $120M in both current organizations by the end of
the first full financial year after the effective date.
3 Net post-employment benefit liability of £424M
(calculated as net retirement benefit liability of £414M, plus
other post-employment benefit liabilities of £23M, less net
retirement benefit assets of £12M), less income tax on net
retirement benefit liability of £68M, as reported in Atkins' H1
2017 statements.
4 Management's expectations with respect to the first
quarter results are based on the information currently available
and are subject to the completion of financial closing procedures,
final adjustments and other developments that may arise between now
and the time the first quarter 2017 financial results are
finalized. It is possible that final reported results may not be
what is currently expected.
The 2017 outlook update is based on the assumptions and
methodology described in SNC-Lavalin's 2016 Management's Discussion
and Analysis under the heading, "How We Budget and Forecast Our
Results", which should be read in conjunction with the
"Forward-Looking Statements" section below and is subject to the
risks and uncertainties summarized therein, which are more fully
described in SNC-Lavalin's public disclosure documents.
CONFERENCE CALL / WEBCAST
SNC-Lavalin will hold a conference call today at 4:45 pm Eastern Time to discuss the proposed
acquisition of Atkins. The public is invited to listen to the
conference call. Participants will be Neil
Bruce, President and Chief Executive Officer and
Sylvain Girard, Executive
Vice-President and Chief Financial Officer. To join the conference
call, please dial toll free at 1 866 564 7439 in North America, 416 642 5209 in Toronto, 438 968 3557 in Montreal, 080 0279 6839 in the United Kingdom, or 180 083 2679 in
Ireland. A live audio webcast of
the conference call and an accompanying slide presentation will be
available at investors.snclavalin.com. A recording of the
conference call will be available on our website within 24 hours
following the call.
About SNC-Lavalin
Founded in 1911, SNC-Lavalin is one of the leading engineering
and construction groups in the world and a major player in the
ownership of infrastructure. From offices in over 50 countries,
SNC-Lavalin's employees are proud to build what matters. Our teams
provide engineering, procurement, construction, completions and
commissioning services together with a range of sustaining capital
services to clients in four industry sectors, oil and gas, mining
and metallurgy, infrastructure and power. SNC-Lavalin can also
combine these services with its financing and operations and
maintenance capabilities to provide complete end-to-end project
solutions. www.snclavalin.com
About Atkins
Atkins (www.atkinsglobal.com) is one of the world's most
respected design, engineering and project management consultancies,
employing some 18,300 people across the UK, North America, Middle East, Asia
Pacific and Europe. We
build long term trusted partnerships to create a world where lives
are enriched through the implementation of our ideas. You can view
Atkins' recent projects on our website.
NON-IFRS MEASURES
Some of the indicators used by SNC-Lavalin to analyze and
evaluate its results are non-IFRS financial measures. Consequently,
they do not have a standardized meaning as prescribed by IFRS, and
therefore may not be comparable to similar measures presented by
other issuers. SNC-Lavalin also uses additional IFRS measures.
Management believes that these indicators provide useful
information because they allow for the evaluation of the
performance of SNC-Lavalin and its components based on various
aspects, such as past, current and expected profitability and
financial position.
This news release uses the following non-IFRS financial
measures: adjusted EBITDA, adjusted EPS and adjusted E&C EPS.
Management uses these measures as a more meaningful way to compare
SNC-Lavalin's financial performance from period to period. Please
refer to SNC-Lavalin's Management Discussion and Analysis
incorporated by reference in the prospectus supplement to
SNC-Lavalin's short form base shelf prospectus dated March 13, 2017 to be filed in each of the
provinces of Canada by SNC-Lavalin
on SEDAR at www.sedar.com for the definitions of all non-IFRS
financial measures and additional IFRS measures and, when
applicable, a clear quantitative reconciliation from the non-IFRS
financial measures to the most directly comparable measure
calculated in accordance with IFRS.
Adjusted net income from E&C is defined as net income
attributable to SNC-Lavalin shareholders from E&C, excluding
one-time net foreign exchange gains, charges related to
restructuring, right-sizing and other, as well as amortization of
intangible assets, the financing, acquisition-related costs and
integration costs incurred in connection with the acquisition of
Kentz in 2014 and the loss on disposals of E&C businesses.
E&C is defined in SNC-Lavalin's 2016 financial statements and
Management's Discussion and Analysis. The term "Adjusted net income
from E&C" does not have any standardized meaning under IFRS.
Therefore, it may not be comparable to similar measures presented
by other issuers. Management uses this measure as a more meaningful
way to compare SNC-Lavalin's financial performance from period to
period. Management believes that, in addition to conventional
measures prepared in accordance with IFRS, certain investors use
this information to evaluate SNC-Lavalin's performance. See
reconciliation below.
Adjusted diluted EPS from E&C is defined as the adjusted net
income from E&C divided by the weighted average number of
outstanding shares for the period.
The following table sets forth detailed reconciliation of a
non-IFRS measure used in this news release (underlying EBITDA of
Atkins) to the nearest or most equivalent IFRS measure (operating
profit of Atkins).
|
|
Atkins
|
Last Twelve
Months
Ended September
30, 2016
|
In £
millions
|
|
Revenue
|
1,952.0
|
|
Cost of
sales
|
(1,174.7)
|
Gross
Profit
|
777.3
|
|
|
|
|
Administrative
expenses
|
(670.4)
|
Operating
Profit
|
106.9
|
|
|
|
|
Exceptional
items
|
4.6
|
|
Impairment of
goodwill
|
18.5
|
|
Amortisation and
impairment of acquired intangibles
|
21.1
|
|
Deferred acquisition
payments
|
3.4
|
|
|
|
Underlying
Operating Profit
|
154.5
|
|
|
|
|
Net (loss) / profit
on disposal of business / non-controlling interests
|
0.5
|
|
Income from other
investments
|
0.5
|
|
Share of post-tax
profit from joint ventures
|
2.6
|
|
|
|
Profit Before
Interest and Tax
|
110.5
|
|
|
|
|
Depreciation
|
18.7
|
|
Amortisation and
impairment
|
44.0
|
|
|
|
EBITDA
|
173.2
|
|
|
|
|
Net loss / (profit)
on disposal of businesses
|
(0.5)
|
|
Exceptional
items
|
4.6
|
|
Deferred acquisition
payments
|
3.4
|
|
|
|
Underlying
EBITDA
|
180.7
|
FORWARD-LOOKING STATEMENTS
This press release contains statements that are or may be
"forward looking statements" or "forward looking information"
within the meaning of applicable Canadian securities laws,
including those regarding the proposed acquisition by SNC-Lavalin
of all of the outstanding shares of Atkins (the "Acquisition") and
the expected impact of the Acquisition on SNC-Lavalin's strategic
and operational plans and financial results. Statements made in
this press release that describe SNC-Lavalin's or management's
budgets, estimates, expectations, forecasts, objectives,
predictions, projections of the future or strategies may be
"forward-looking statements", which can be identified by the use of
the conditional or forward-looking terminology such as "aims",
"aligns", "anticipates", "assumes", "believes", "continue", "cost
savings", "could", "estimates", "expects", "foresees", "goal",
"intends", "maintain", "may", "plans", "projects", "should",
"strategy", "synergies", "targets", "will", "would", the negative
thereof, other variations thereon or similar terminology, as they
relate to SNC-Lavalin, Atkins or the combined entity following the
Acquisition. Forward-looking statements also include any other
statements that do not refer to historical facts. Forward-looking
statements also include, but are not limited to, future capital
expenditures, revenues, expenses, earnings, economic performance,
cash flows, indebtedness, financial condition, losses and future
prospects; and business and management strategies and expansion and
growth prospects of SNC-Lavalin's and the combined entity's
operations following the Acquisition. The pro forma information set
forth in this press release should not be considered to be what the
actual financial position or other results of operations would have
necessarily been had the Acquisition been completed as, at, or for
the periods stated. All such forward-looking statements are made
pursuant to the "safe-harbour" provisions of applicable Canadian
securities laws. SNC-Lavalin cautions that, by their nature,
forward-looking statements involve known and unknown risks and
uncertainties, and that its actual actions and/or results could
differ materially from those expressed or implied in such
forward-looking statements, or could affect the extent to which a
particular projection materializes. Forward-looking statements are
presented for the purpose of assisting investors and others in
understanding certain key elements of SNC-Lavalin's current
objectives, strategic priorities, expectations and plans, and in
obtaining a better understanding of SNC-Lavalin's business and
anticipated operating environment. Readers are cautioned that such
information may not be appropriate for other purposes. This press
release also contains forward-looking statements with respect to:
the bought deal public offering and the concurrent private
placement and expected timing thereof and use of proceeds
therefrom; expected SNC-Lavalin financial performance;
SNC-Lavalin's business model and acquisition strategy; the
indebtedness to be incurred under the various elements and
components of the Acquisition financing plan and the use thereof;
the expected completion of the Acquisition and timing thereof; the
aggregate cash consideration payable by SNC-Lavalin in connection
with the Acquisition and the anticipated sources of financing
thereof; the fact that closing of the Acquisition is conditioned on
certain events occurring, and the receipt of all necessary
regulatory (including antitrust), shareholder, court and stock
exchange approvals; the anticipated consolidated indebtedness of
SNC-Lavalin after giving effect to the Acquisition and certain
other transactions; anticipated benefits of the Acquisition
(including the impact of the Acquisition on SNC-Lavalin's size,
operations, infrastructure, capabilities, development, growth and
other opportunities, geographic reach, business portfolio, market
position, financial condition, balance sheet, risk profile,
margins, cash flow profile, access to capital and overall
strategy); the attractiveness of the Acquisition from a financial
perspective in various financial metrics; expectations regarding
accretion and contribution to earnings, margins and revenues and
overall quality thereof, the addition of long-term revenue
opportunities, the generation of consistent high-margin revenues,
and margin expansion; the ability of SNC-Lavalin to achieve various
financial targets following the Acquisition; the ability of the
combined entity to capitalize on the global nuclear, power,
infrastructure and transportation spending trends and on large
scale infrastructure projects; the potential to significantly
increase SNC-Lavalin's global customer base, expand and deepen the
areas of the market the combined entity can address, and the manner
thereof; the growth opportunities associated with Atkins' business
and the combined entity in key geographies, the ability of the
combined entity to benefit therefrom and the manner of achieving
such growth; expectations regarding the customer, geographical and
sector diversification and global footprint of the combined
business; the ability of the combined entity to maintain long-term,
repeat business with key clients and to better meet client needs
and create cross-selling opportunities; the belief that SNC-Lavalin
is well positioned, operationally and financially, to commence its
next phase of growth and build a global E&C powerhouse; the
expectation of added stability to SNC-Lavalin's margin and cash
flow profile with inherently low financial risk leading to
consistent and predictable margin profile; SNC-Lavalin's ability to
create a global, fully integrated professional services and project
management company and build a more resilient business model; the
strength of SNC-Lavalin's position as a premier partner to public
and private sector clients; the governance of Atkins after the
Acquisition, the leveraging of respective core competencies and
strategies, the retention and role of Atkins employees and the
holding of significant roles for existing Atkins management; the
growth of the employee base of the combined entity and the value
and capabilities of such employees; the liquidity of the combined
entity and its ability to maintain an investment grade credit
rating and to continue servicing Atkins' pension deficit; the
maintenance of SNC-Lavalin's existing dividend policy; the strength
of the combined entity as a nuclear services company, and its
ability to win and deliver various projects; expectations regarding
the strength, complementarity and compatibility of Atkins with
SNC-Lavalin's existing business and management teams; expectations
regarding the market positioning of the combined entity;
expectations regarding GDP growth rates in global infrastructure
investments; expectations regarding the integration of SNC-Lavalin
and Atkins and timing thereof; expectations regarding anticipated
cost savings, operating efficiencies and operational, competitive
and cost synergies resulting from the Acquisition, and the manner
of achieving such synergies; and expectations regarding the
potential to realise incremental revenue synergies within the
combined entity, and minimise potential revenue
cannibalisation.
Although SNC-Lavalin believes that the expectations, opinions,
projections, and comments reflected in these forward-looking
statements are reasonable and appropriate, it can give no assurance
that such statements will prove to be correct. The assumptions are
set out throughout SNC-Lavalin's 2016 Management's Discussion and
Analysis filed with the securities regulatory authorities in
Canada, available on SEDAR at
www.sedar.com or on SNC-Lavalin's website at
www.snclavalin.com under the "Investors" section (the
MD&A) (particularly, in the sections entitled "Critical
Accounting Judgments and Key Sources of Estimation Uncertainty" and
"How We Analyze and Report our Results") and, in relation to the
Acquisition, the bought deal public offering and the concurrent
private placement, include the following material assumptions: the
satisfaction of all conditions of closing and the successful
completion of, each of the bought deal public offering, the
concurrent private placement and the Acquisition within the
anticipated timeframe, including receipt of regulatory (including
antitrust), shareholder, court and stock exchange approvals; the
availability of borrowings to be drawn down under, and the
utilization of, various elements and components of the Acquisition
financing plan in accordance with their respective terms; the
maintenance of SNC-Lavalin's investment grade credit rating;
fulfillment by the underwriters of their obligations pursuant to
the underwriting agreement and by CDPQ of its obligations pursuant
to the subscription agreement; that no event will occur which would
allow the underwriters to terminate their obligations under the
underwriting agreement, or which would allow CDPQ to terminate its
obligations under the subscription agreement; the successful and
timely integration of SNC-Lavalin and Atkins and the realization of
the anticipated benefits and synergies of the Acquisition to
SNC-Lavalin in the timeframe anticipated, including impacts on
growth and accretion in various financial metrics; that no superior
acquisition proposal will be received or approved by Atkins' board
of directors and no such superior acquisition proposal will become
effective, become or be declared unconditional; the ability of the
combined entity to retain key employees of Atkins and its
subsidiaries, and the value of such key employees; the realization
of expected GDP growth rates in global infrastructure investments,
the continued need for significant upgrading of ageing
infrastructure in the U.S. and expected wave of large scale
infrastructure projects globally; the ability of SNC-Lavalin to
satisfy its liabilities and meet its debt service obligations prior
to and following completion of the Acquisition, and to continue
servicing Atkins' pension deficit; the ability of SNC-Lavalin to
access the capital markets prior to and following the Acquisition;
the absence of significant undisclosed costs or liabilities
associated with the Acquisition; the accuracy and completeness of
Atkins' public and other disclosure; the absence of significant
changes in foreign currency exchange rates or significant
variability in interest rates; the ability to
hedge exposures to fluctuations in
interest rates and foreign exchange rates; no
material adverse regulatory decisions being received and the
expectation of regulatory stability; no significant
operational disruptions or liability due to a catastrophic event or
environmental upset caused by severe weather, other acts of nature
or other major events; no severe and prolonged downturn in economic
conditions; sufficient liquidity and capital resources; the
continuation of observed weather patterns and trends; no
significant counterparty defaults; the continued availability of
industry-leading design, consulting and high-end engineering
professionals; the absence of significant changes in taxation and
environmental laws and regulations that may materially negatively
affect the operations and cash flows of the combined entity; no
material change in public policies and directions by governments
that could materially negatively affect the combined entity; the
maintenance of adequate insurance coverage; the ability to obtain
and maintain licences and permits; and no material changes in
market conditions.
If these assumptions are inaccurate, SNC-Lavalin's, Atkins' or
the combined entity's actual results could differ materially from
those expressed or implied in such forward-looking statements. In
addition, important risk factors could cause SNC-Lavalin's, Atkins'
or the combined entity's assumptions and estimates to be inaccurate
and actual results or events to differ materially from those
expressed in or implied by these forward-looking statements. These
risks include, but are not limited to, those described under the
sections "Risks and Uncertainties", "How We Analyze and Report Our
Results" and "Critical Accounting Judgments and Key Sources of
Estimation Uncertainty" in SNC-Lavalin's 2016 MD&A and, with
respect to the proposed Acquisition, the bought deal public
offering and the concurrent private placement discussed herein
specifically, potential risks include: the failure to receive
or delay in receiving regulatory approvals (including antitrust and
stock exchange), shareholder or court approval or otherwise satisfy
the conditions to the completion of the Acquisition or delay in
completing the Acquisition and uncertainty regarding
the length of time required to
complete the Acquisition; the possibility that even if
the Acquisition is approved by Atkins' shareholders and court
sanctioned, the Acquisition will not close or that its closing may
be delayed; the possibility that SNC-Lavalin be required to pay
Atkins a break-fee in certain circumstances; the failure to receive
regulatory approvals (including stock exchange) or otherwise
satisfy the conditions to the completion of the bought deal public
offering and the concurrent private placement or delay in
completing the bought deal public offering and the concurrent
private placement and the funds thereof not being available to
SNC-Lavalin in the time frame anticipated or at all; the occurrence
of an event which would allow the underwriters to terminate their
obligations under the underwriting agreement or which would allow
CDPQ to terminate its obligations under the subscription agreement;
potential unavailability of various elements and components of the
Acquisition financing plan; alternate sources of funding that would
be used to replace the various elements and components of the
Acquisition financing plan may not be available when needed, or on
desirable terms; increased indebtedness of
SNC-Lavalin after the closing of
the Acquisition; the failure by SNC-Lavalin to satisfy its
liabilities and meet its debt service obligations prior to and
following completion of the Acquisition or to continue servicing
Atkins' pension deficit; the risk that SNC-Lavalin's or Atkins'
business will be adversely impacted during the pendency of the
Acquisition; lack of control by SNC-Lavalin on Atkins and its
subsidiaries prior to the closing of the Acquisition; the risk
that the Acquisition could result
in a downgrade of SNC-Lavalin's credit ratings; potential
undisclosed costs or liabilities associated with the Acquisition,
which may be significant; impact of acquisition-related expenses;
inaccurate or incomplete Atkins publicly disclosed information;
historical and pro forma combined financial information may not be
representative of future performance; the failure to retain Atkins'
personnel and clients following the Acquisition and risks
associated with the loss and ongoing replacement of key personnel;
the impact of the announcement of the Acquisition on SNC-Lavalin's
and Atkins' relationships with third parties, including commercial
counterparties, employees and competitors, strategic relationships,
operating results and businesses generally; the failure to realize,
in the timeframe anticipated or at all, the anticipated benefits
and synergies of the Acquisition, including without limitation
revenue growth, anticipated cost savings or operating efficiencies
and operational, competitive and cost synergies; the possibility
that SNC-Lavalin's integration plan for Atkins could be
ill-conceived or poorly executed and result in loss of customers,
employees, suppliers or other benefits and goodwill of the Atkins
business; factors relating to the integration of SNC-Lavalin and
Atkins (such as the impact of significant demands placed on
SNC-Lavalin and Atkins as a result of the Acquisition, the time and
resources required to integrate both businesses, diversion of
management time on integration-related issues, unanticipated costs
of integration in connection with the Acquisition, including
operating costs or business disruption being greater than expected,
and the difficulties and delays associated with such integration);
the possibility that Atkins' board of directors could receive and
approve a superior acquisition proposal or a superior acquisition
proposal becomes effective, becomes or is declared unconditional;
and exchange rate risk and foreign currency exposure risk.
SNC-Lavalin cautions that the foregoing list of factors is not
exhaustive. Other risks and uncertainties not presently known to
SNC-Lavalin and Atkins or that SNC-Lavalin and Atkins presently
believe are not material could also cause actual results or events
to differ materially from those expressed in its forward-looking
statements. Accordingly, there can be no assurance that the
proposed Acquisition will occur or that the anticipated strategic
benefits and operational, competitive and cost synergies will be
realized in their entirety, in part or at all.
The forward-looking statements contained in this press release
are expressly qualified in their entirety by the foregoing
cautionary statements. The forward-looking statements herein
reflect SNC-Lavalin's expectations as at the date hereof, and are
subject to change after this date. SNC-Lavalin does not undertake
any obligation to update publicly or to revise any such
forward-looking statements whether as a result of new information,
future events or otherwise, unless required by applicable
legislation or regulation. All subsequent oral or written forward
looking statements attributable to SNC-Lavalin or any of its
directors, officers or employees or any persons acting on their
behalf are expressly qualified in their entirety by the cautionary
statement above.
Financial outlook information contained in this press release
about prospective results of operations, financial position or cash
flows is based on assumptions about future events, including
economic conditions and proposed courses of action, based on
management's assessment of the relevant information available as of
the date of this press release. Readers are cautioned that such
financial outlook information contained in this press release
should not be used for the purposes other than for which it is
disclosed herein or therein, as the case may be.
Readers are also referred to cautionary language regarding
forward-looking statements included in the applicable prospectus
supplement.
SOURCE SNC-Lavalin