SNC is Looking for Another Highway 407

Article Excerpt

SNC-LAVALIN GROUP INC. $30 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Average) is one of the world’s leading engineering and construction firms. It specializes in large-scale public works projects such as water treatment systems, highways and power plants. SNC is currently working on projects in over 100 countries. SNC typically builds a public facility, and agrees to operate it under a long-term concession contract. Concessions account for 30% of its revenue. SNC’s best-known concession is Highway 407, a toll highway north of Toronto. In May 1999, SNC paid $175 million for a 26.92% stake the highway, and the right to operate it for 99 years. SNC later cut its interest to 16.77%. Although Highway 407 is still losing money, its revenue is growing strongly and it should become profitable in the next few years. The company is now working on several new concession projects it hopes have the same potential as Highway 407. It’s building a new…

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