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Montreal’s SNC-Lavalin Group Inc., one of the world’s top engineering and construction businesses, is prepared for a radical reshaping if the criminal trial it faces on corruption charges thrusts the company into years of legal limbo that damage shareholder value, the company’s CEO, Neil Bruce, says.

Mr. Bruce confirmed the views of some analysts that SNC will not allow its valuation to remain depressed if it is buffeted by years of legal problems. It is also facing the headwind of potential instability in Saudi Arabia, which accounted for 11 per cent of overall revenue in 2017.

“We do have a Plan B in the works,” he said in a phone interview on Monday, without providing details. “We have to protect shareholder value. We have various options.”

When asked about the company’s options, he pointed toward some of the ideas set out in an analyst’s report published by Desjardins Capital Markets last week. The report said Mr. Bruce’s options included selling the core engineering and construction (E&C) business in whole or in part; privatizing the company, perhaps with a strategic partner such as a pension fund; or winding down the Canadian operations, which may suffer greatly if any criminal trial resulted in a conviction that prevents it from bidding on federal contracts for up to 10 years.

Mr. Bruce said he has resurrected the restructuring team formed in 2015, when he was appointed chief executive and set out to reinvent a company that had been besieged by corruption allegations and criminal charges against several former senior executives.

SNC shares plummeted 14 per cent on Oct. 10, after the company announced the Public Prosecution Service of Canada had refused to negotiate a remediation agreement that would settle the outstanding fraud and bribery charges against it. (The criminal proceedings against the former executives, including Pierre Duhaime, who was CEO until suspicions of corruption forced him out of the company in 2012, are a separate matter and do not affect SNC directly.)

Such an agreement, known as a deferred prosecution agreement, or DPA, is common in some Group of Seven countries. It grants amnesty to a company charged with criminal wrongdoing in exchange for potentially hefty fines and pledges to adopt tough corporate reforms designed to prevent instances of fraud.

Mr. Bruce said the denial of a DPA came as as “complete surprise.”

DPAs were introduced into the Criminal Code of Canada last month.

“We have been given no reason why our request for a DPA was turned down, which is why we’re appealing,” he said. “I can’t believe the government would introduce legislation to bring us in line with other countries after all the work we have done to reshape the company’s compliance and ethics standards, which are recognized as being first class. Why bring in the legislation and not use it?"

SNC, he said, now finds itself competing in Canada with foreign E&C companies that had used DPAs to stave off criminal convictions.

While a DPA is not out of the question for SNC, it is highly unlikely to arrive before Oct. 29, when a preliminary inquiry begins in a Montreal court, during which a judge will determine if there is a need for a trial. The inquiry is expected to last a month or so. If a trial proceeds, it would start nine to 12 months later and possibly last two or three years.

SNC’s share were considered undervalued compared to its peer group even before the prosecution service denied the DPA. Desjardins analyst Benoit Poirier says that SNC shares, subtracting the estimated value of its equity stake in Ontario’s Highway 407 and other non-core assets, trade at 4.9 times Desjardins’s earnings per share forecast of $3.03 in 2019 for the company’s core engineering and construction business, well below the 13.3 times for its peers and SNC’s own 10-year average of 10.6 times.

The low valuation suggests that SNC might attract bidders. “We believe that SNC could be an attractive takeover target if its valuation remains depressed,” the Desjardins report said.

Mr. Bruce would not comment on takeover speculation, but acknowledged that he is “fighting to maintain a Canadian icon.”

While SNC’s failure to secure a DPA was real blow, Mr. Bruce said that the company’s business in Saudi Arabia “seems to be carrying on as normal.”

SNC was worried about a tweet from Foreign Affairs Minister Chrystia Freeland in August, which called for the release of two detained Saudi dissidents. The Saudi regime took a hostile view of this and expelled the Canadian ambassador to the kingdom. But the Saudi operations have been largely unaffected, Mr. Bruce said. SNC’s employment in Saudi Arabia has actually increased marginally, to about 9,100 jobs, since August.

Mr. Bruce said that neither he nor any of his lieutenants is attending the Saudi Arabia’s Future Investment Initiative, known as Davos in the Desert, which is to begin on Tuesday in Riyadh. The showpiece conference, launched last year by Crown Prince Mohammed bin Salman, has been buffeted by high-profile CEO defections in the wake of revelations that Saudi journalist Jamal Khashoggi was killed in the Saudi consulate in Istanbul on Oct. 2.

Mr. Bruce did not attend last year’s conference and was not planning to go this year either. “It’s really not our sort of thing,” he said. “We prefer to spend our time with our clients instead.”

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