SNC-Lavalin Woes: $3.9 Billion Stock Wipeout, Bonds Spread Widen

(Bloomberg) -- SNC-Lavalin Group Inc., the embattled Canadian engineering firm, is hitting investors from both sides now: stocks and bonds.

Shares of Montreal-based SNC tumbled another 9 percent Tuesday after the firm’s largest shareholder, the Caisse de Depot et Placement du Quebec, said that SNC must build a culture of execution and take a “major step up in discipline” to implement its new strategy.

The stock fell to a 15-year low, bringing the year-to-date plunge to 65 percent, the second-worst performer on Canada’s benchmark S&P/TSX Composite Index. SNC Lavalin’s C$300 million ($226 million) of 3.235% notes due 2023 were quoted Tuesday at the widest spread over government bonds since they were issued in February last year.

Here’s a look at the impact SNC-Lavalin’s corporate woes have had on investors this year:

• SNC-Lavalin’s stock value has eroded by C$5.2 billion ($3.9 billion) this year after the company issued three profit warnings, wrote down the value of its Middle East energy business and lost a contract in Chile valued at $260 million. The company also found itself at the center of Canada’s biggest political crisis in years when Prime Minister Justin Trudeau tried to help the company avoid a criminal trial over its dealings in Libya.

• Notes due in 2023 are quoted at about 230 basis points over Canadian benchmark government debt Tuesday, compared with about 172 basis points in July, according to bid prices at Bloomberg.

--With assistance from Esteban Duarte.

To contact the reporters on this story: Divya Balji in Toronto at dbalji1@bloomberg.net;Paula Sambo in Toronto at psambo@bloomberg.net

To contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net, David Scanlan

©2019 Bloomberg L.P.