SNC-Lavalin is to buy Atomic Energy of Canada’s (AECL) commercial reactor division for an upfront payment of $15 million. Under the deal, the Canadian government will also receive royalty payments from future new build and life extension projects and will retain ownership of all Candu intellectual property.

Overall, the government says it could realize a net present value of around $285 million from royalties and the sale of its heavy water inventory.

Under the agreement, signed 29 June, Candu Energy, a newly-created subsidiary of SNC-Lavalin will take over the Candu Reactor Division’s three business lines: services to the existing fleet, life-extension projects, and reactor new builds.

Candu Energy will complete the ongoing life extension projects at Bruce Power, Wolsong, Point Lepreau and Gentilly-2 through subcontract service agreements with the Government of Canada.

In addition, SNC-Lavalin estimates it will receive annual revenues of approximately $100 million from service product lines, based on AECL’s past history.

Candu Energy says it will work towards completing the Enhanced Candu reactor (EC6) development programme, with $75 million of financial support from the Government. It has also annouced plans to target new build projects in Ontario, Canada as well as in other countries around the world such as Jordan, Romania, Argentina, Turkey and China.

“The CANDU commercial reactor business will benefit greatly from SNC-Lavalin’s entrepreneurial capacity and global scale,” said Natural Resources Minister Joe Oliver.

The transaction is expected to be completed in the early fall of 2011, subject to various conditions and approvals. Approximately 1200 employees are expected to move from AECL to Candu Energy. NEI magazine understands that up to 900 AECL employees could lose their jobs. The transaction does not affect the employees of the Nuclear Laboratories Division.