SNC-Lavalin Group Inc.’s stock fell again after Standard & Poor’s downgraded its credit rating to junk status.
Shares in the engineering giant closed down 24 cents or 1.4 per cent to $16.90 in trading on the Toronto Stock Exchange, after falling as low as $16.62 in initial trading.
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Standard & Poor’s cut SNC-Lavalin’s rating to double-B-plus from triple-B-minus on Monday, which could make it costlier for the firm to borrow money. The bond-rating agency pointed to “significant losses” on fixed-price contracts and “uncertainty in the company’s ability to recover earnings and cash flow.”
The downgrade comes with the company already in the crosshairs of a political controversy and on the brink of a criminal trial on corruption charges connected to business dealings in Libya.
Earlier this summer, SNC moved to a pared-down strategy focused on engineering work rather than large, lump-sum construction contracts in which it has to eat any additional costs. Standard & Poor’s wondered if the change would affect SNC’s engineering business.
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The agency also highlighted a slowing global economy and “unresolved legal issues” as potential risks.
Shares in SNC, which also remains in the eye of a political storm in Ottawa that escalated with last week’s ethics commissioner report, have hit successive 15-year-lows since it reported losses of $2.12 billion on Aug. 1.
The Quebec company has reported losses for three quarters straight and slashed its financial forecast three times since January, when its market capitalization stood at roughly three times its current value, now at roughly $2.93 billion.
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