Impending sale of Atomic Energy of Canada Ltd. looms

OTTAWA — It has been called the crown jewel of Canadian technology and one of the biggest sinkholes of taxpayer money.

OTTAWA — It has been called the crown jewel of Canadian technology and one of the biggest sinkholes of taxpayer money.

Now the lengthy saga of Atomic Energy of Canada Ltd. appears nearly over.

A report in the Globe and Mail said the federal government is poised to announce the sale of AECL to Montreal-based engineering firm SNC-Lavalin Group (TSX:SNC).

Negotiators are still working out the final details of the deal that would see the company spin off and sell its commercial reactor division for a bargain-basement price.

SNC-Lavalin won’t say anything until a deal is done.

“We are not doing interviews on this subject yet because we are not in a position to respond to any of the information that is circulating,” said Leslie Quinton, vice-president of global corporate communications.

But it’s expected a deal will be announced within days.

The Crown corporation has long been a headache for successive federal governments. AECL has cost Canadian taxpayers billions of dollars and faced major cost overruns at key projects in recent years while struggling to find a buyer.

The Conservative government of Prime Minister Stephen Harper didn’t exactly start a bidding war two years ago when Harper’s then-chief spokesman, Kory Teneycke, called AECL “one of the largest sinkholes of government money probably in the history of the government of Canada.”

SNC-Lavalin finally emerged as the sole bidder to meet Ottawa’s conditions for buying the financially troubled Crown corporation.

A sale has been a long time coming.

In May 2009, the Conservatives announced plans to spin off AECL’s commercial reactor business from its research division.

The announcement coincided with what turned into a lengthy shutdown of the company’s research reactor at Chalk River, Ont., which caused a worldwide shortage of the medical isotopes used to detect cancer and heart ailments.

The National Research Universal reactor was down for 15 months. There were times when it looked like the 54-year-old reactor might never return to service.

Then there were the Maples.

Two Multipurpose Applied Physics Lattice Experiment reactors were meant to replace the aging NRU reactor until AECL scrapped the project in 2008 due to design flaws. The Maples were millions of dollars over budget and years behind schedule when the Conservatives finally pulled the plug.

All those research reactors and facilities will remain in government hands.

But AECL’s commercial reactor business always held great promise.

The company has bid for the two new reactors Ontario wants to build, but the province won’t make a decision until AECL’s future is certain.

There’s a good chance SNC-Lavalin isn’t counting on AECL building any new reactors, says analyst Maxim Sytchev of Northland Capital Partners.

“SNC-Lavalin’s management is known for being conservative. As a result, we don’t believe that the purchase valuation would assign any value to new builds.”

That leaves AECL’s repair business. The company’s new owners are expected to make big bucks refurbishing aging Candu reactors around the world.

“The big potential money maker is the (refurbishment) business,” said Steve Aplin, an energy policy consultant with Ottawa-based HDP Group.

He added: “This is a billion-dollar business.”

The company also comes with a deep talent pool that’s the envy of the global nuclear industry. Even French nuclear giant Areva — which makes a different kind of reactor — was once interested in AECL for the people who work there.

AECL clearly still has value. Word of a possible sale pushed SNC-Lavalin’s shares up 88 cents to $56.65 on the Toronto Stock Exchange by mid-afternoon.