SNC-Lavalin to sell oil and gas business
By Andy Brown11 February 2021
Canadian-based engineering and construction company SNC-Lavalin Group has entered into a binding agreement to sell its Resources Oil & Gas business to Kentech Corporate Holdings Limited. The transaction is subject to regulatory approvals and is expected to complete in the second quarter of 2021.
In a press release, SNC-Lavalin said the transaction is expected to create a gain on sale. The Oil & Gas business will be classified as an ‘Asset Held for Sale’ in the fourth quarter of 2020 and is expected to result in a fair value write down in the range of C$260 million (US$205 million) to C$295 million (US$232 million).
The deal is a wider part of SNC-Lavalin’s strategy to reduce its risk profile and transition to becoming a leading provider of professional engineering services and project management solutions.
“Over the past 18 months, we have made significant strides in advancing our strategy and de-risking the business. Following the introduction of our new strategy in July 2019, we have significantly improved our operating cash flows and demonstrated that our Engineering Services line of business is resilient and can deliver strong results,” said Ian L. Edwards, President and CEO of SNC-Lavalin Group.
“The sale of the Oil & Gas business further simplifies and de-risks our business and allows us to enhance our focus on growing our high potential core Engineering Services busines.”
Kentech is a privately-owned specialist services and solutions firm for the energy industry. It operates in three key areas: engineering and projects; commissioning and start-up services; and turnaround, maintenance and modifications.
Following the purchase, Kentech has reported that its numbers of employees has increased to over 10,000 and that the company will have a project backlog of US$1.1 billion.