Neil Bruce, SNC-Lavalin Group Inc.’s chief executive, is stepping down from the beleaguered engineering giant after a nearly four-year tenure that saw its stock fall by roughly half and its projects overshadowed by a political controversy tied to an ongoing corruption case.
Ian Edwards, the company’s chief operating officer, has been named interim chief executive effective immediately.
SNC-Lavalin said the board of directors has asked Edwards to review “the strategic direction of the company on an expedited basis” and develop a new plan “for sustainable success.”
After hitting successive 10-year lows since late January, the company’s stock jumped 6.7 per cent to $25.28 in late-morning trading Tuesday.
The company said Bruce is retiring and returning to his family in the United Kingdom. He is expected to remain an adviser to the board until the end of the year.
Bruce, 58, who took the helm in October 2015 and steered the company through its purchase of WS Atkins in 2017, has struggled to move beyond a difficult period in the company’s history. Its reputation has taken a beating over fraud and corruption charges related to its work in Libya that preceded Bruce’s tenure, and the company has found itself ensnared in political controversies, both at home and abroad.
The firm slashed its 2018 guidance twice in three weeks, more than halving its profit forecast and halting all bidding on future mining projects amid an ongoing diplomatic feud between Canada and Saudi Arabia – a key source of oil and gas revenue – and delays on SNC’s project with Codelco, Chile’s state-owned copper mining company, which has since cancelled the contract.
Last month, the company announced plans to wind down its operations in 15 countries and reported a $17-million loss in its latest quarter.
“Overall, we believe the appointment of a new CEO was somewhat expected considering SNC’s operational and financial performance since the beginning of the year,” said Desjardins Securities analyst Benoit Poirier wrote in a note to investors.
The strategic review announced Tuesday could fuel speculation about SNC seeking to effect a “Plan B” that would see it decamp to the United States and redirect its efforts away from bids on home soil.
“We see this increasing the likelihood that SNC will explore divestitures around its infrastructure construction assets and resource-based segments in an effort to unlock value and reposition itself as a pure-play design firm,” said Derek Spronck of RBC Dominion Securities in a client note.
Prime Minister Justin Trudeau has argued that a criminal trial could trigger the company’s exit to the U.S. and the loss of thousands of jobs, a sentiment that was supported by an internal SNC-Lavalin document obtained by The Canadian Press.
SNC-Lavalin warned federal prosecutors last fall about a possible plan to split the company in two, move its offices south of the border and chop its Canadian workforce to 3,500 from 8,700 before eventually shuttering its domestic operations if it didn’t get a deal to avoid criminal prosecution.
A Quebec judge ruled last month there was enough evidence to send SNC-Lavalin to trial over charges of fraud and corruption. The company has pleaded not guilty.
The firm has been at the centre of a political controversy following accusations by former attorney general Jody Wilson-Raybould that top government officials pressured her to overrule federal prosecutors and negotiate a deferred prosecution agreement with the company.
Edwards, who was named chief operating officer in January, has more than 30 years of experience with infrastructure and resources projects across North America, Europe, the Middle East, and Asia, the company said.
He joined SNC-Lavalin in 2014 following six years in senior roles with the Leighton Group, where he oversaw 20,000 employees as managing director of Leighton Asia, India and Offshore.