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Globe Investor SNC-Lavalin, partners target 11th-hour shipbuilding bid

Engineering giant SNC-Lavalin Group Inc. and its partners are racing the clock in a down-to-the-wire effort to bid on potentially lucrative contracts to be had in the federal government's massive, $35-billion shipbuilding program.

SNC's partners – Upper Lakes Group of Ontario and Daewoo of South Korea – are in talks with the Quebec government over some kind of financial support from the province in their proposed acquisition of Davie Yards Inc., the historic 186-year-old shipyard in Lévis, Que.

Montreal-based SNC would not be a partner in the joint venture to acquire Davie, which has been in creditor protection since February of 2010, but would bid with Upper Lakes and Daewoo on Ottawa's long-term project to build a fleet of new defence, patrol and scientific research vessels.

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The deadline for submissions is Thursday, and if the group is unable to secure some form of financial participation or aid from Quebec, the proposed acquisition of Davie – and bidding for a piece of the federal contracts – will likely fall through.

"We're doing everything we can to reach an agreement to put back the Davie Yards into operation as quickly as possible in order to meet the [National Shipbuilding Procurement Strategy's] July 21 deadline for the submission of qualifying documents," said a spokeswoman in the office of Leslie Quinton, SNC's vice-president of global corporate communications.

So far, the federal government has already extended the bidding process by two weeks and other bidders have stated that a further delay would be unfair to those who were ready with their bids on the original July 7 deadline.

The partners seeking to purchase Davie quickly put together a proposal after Italian shipbuilder Fincantieri unexpectedly dropped its proposed bid to buy Davie last week.

Fincantieri, a unit of defence electronics giant Finmeccanica, said the July 21 deadline was too tight.

Jolyane Pronovost, spokeswoman for Quebec's minister of economic development, said in an interview Tuesday that Fincantieri and the government were unable to agree on terms of provincial support.

If an agreement with Quebec is worked out and Davie Yards does end up bidding, it will be up against two strong rivals: Irving Shipbuilding Inc. of Halifax and Seaspan Marine Corp. in British Columbia.

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It's expected that two shipyards will be chosen for the bulk of the work.

"Any further extension would certainly put a shadow of doubt on the bidding process and the system, which has been extremely open, transparent and fair," Seaspan chief executive officer Jonathan Whitworth said.

The fact that Davie, an insolvent shipyard under protection from its creditors, is even going ahead with an attempt at a bid is unusual, he said.

"The process is supposed to include only businesses that are solvent and a going concern and Davie has not solved that problem," he said.



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