Aecon extends deadline to complete CCCI deal

The deadline for Aecon Group Inc. to complete its sale to a Chinese state-owned business has been extended to July 13 as Ottawa continues its national security review of the $1.5-billion deal.

The Calgary-based construction company and acquirer CCCC International Holding Ltd. (CCCI) had faced a self-imposed deadline of Friday to close the controversial transaction.

“The parties chose to extend the outside date because of the ongoing review of the proposed transaction under the Investment Canada Act,” Aecon said in a brief statement on Wednesday.

“As Aecon previously disclosed in February, its expectation is that, assuming approval under the Investment Canada Act and the satisfaction of other customary closing conditions for a transaction of this nature, the transaction will close before the end of the second quarter and before the July 13, 2018, outside date of the arrangement agreement.”

The national security review ordered by Ottawa in February was to wrap up within 45 days — or by Thursday or Friday — but the office of Navdeep Bains, minister of innovation, science and economic development, wouldn’t say Wednesday if it had been extended.

“We will take the appropriate time that we need,” the minister said. “So it’s not about any specific date, it’s making sure we do our proper due diligence.”

The extension for a second 45-day period can be inferred by the Aecon news and comes as no shock, said analyst Derek Spronck of RBC Dominion Securities in a note to investors.

“Due to the nature of the transaction, the government previously indicated that it will need to do a comprehensive and thorough review and, as such, the extension of the outside date is not surprising,” he wrote.

“The government clearly invoked this second 45-day review period,” he said, pegging a potential decision by May 11.

Aecon has a large presence in Cambridge, through its nuclear division, which has facilities on Sheldon Drive.

Analyst Chris Murray of AltaCorp Capital said in a report he continues to believe the government will demand changes as a condition of approval.

He said previously the government might order the sale of Aecon’s telecom infrastructure group, which builds core communications networks for several major Canadian carriers.

“Given the precedents set through prior security reviews, we believe it likely that there could be some impact to the transaction, which could include divestitures or other conditions being imposed, which could prompt further delays or changes in the transaction,” he wrote.

Government approval under the Investment Canada Act is the last major hurdle that Aecon must clear to close the deal.

The company has already received approval from the Competition Bureau, Aecon shareholders and the Chinese government.