MONTREAL — The Quebec government is paying $233 million to settle lawsuits over extra costs related to the construction of two large Montreal hospitals, including one that is at the centre of bribery allegations involving a former chief executive of SNC-Lavalin.
The province will pay $125 million to the Centre Hospitalier du Universite de Montreal (CHUM) and its partner, Collectif Sante Montreal (CSM). The group had claimed $367 million in its lawsuit.
Quebec will also pay $108 million to the McGill Health Real Estate Group, a partnership between SNC-Lavalin (TSX:SNC) and Innisfree Ltd., to settle the $360 million claim of two lawsuits over the McGill University Health Centre.
The first settlement was reached more than a year ago, but kept confidential to avoid interfering with the McGill suit. It covers two phases of the $3-billion downtown project. The first opened in September and a second one is to be completed in 2021.
SNC-Lavalin (TSX:SNC) filed suit in 2016 against the McGill University Health Centre and the government over extra costs to build the $1.34-billion hospital, which opened in June 2015.
Despite the payment, the government says the budget authorized in 2010 to build both hospitals were respected with no cost overruns.
Some of the payment is the result from authorized changes whose value was in dispute.
SNC-Lavalin says it's pleased by the out-of-court settlement.
The McGill Healthcare Infrastructure Group is responsible for managing the hospital and ensuring its upkeep until Sept. 30, 2044.
SNC-Lavalin says the partnership and MUHC will continue to work closely to ensure the well-being of patients.
Crown prosecutors allege former SNC-Lavalin executives paid a $22.5-million bribe to a former MUHC chief executive to obtain the contract. That case is still before the courts.
Derek Spronck of RBC Capital Markets said the settlement is positive and higher valuations for SNC could result as legacy issues are put behind the company.
Ross Marowits, The Canadian Press