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2011/57 (a)


The Transaction Agreements

An agreement was reached on June 29 with a new subsidiary of SNC-Lavalin Group Inc. (SNC-Lavalin), CANDU Energy, to acquire AECL’s CANDU Reactor Division. 


The key transaction agreement is an Asset Purchase Agreement (APA), which sets out the contractual terms for the sale and purchase of the assets of AECL’s CANDU Reactor Division. The suite of agreements that together constitute the Transaction Agreements includes the following series of ancillary agreements:

  • Intellectual Property Licence Agreement
  • EC6 Support Agreement
  • Five Life-Extension Project Subcontracts
  • Intercompany Services Agreement
  • Transition Services Term Sheet
  • Parent Guarantee
  • Pension Plans Participation Agreement

Asset Purchase Agreement

The APA is between AECL, CANDU Energy and SNC-Lavalin as CANDU Energy’s corporate parent. 

The APA describes the assets purchased, which include substantially all the assets comprising CANDU Reactor Division’s three lines of business, with the exception of intellectual property (IP), which is being licensed rather than sold, and the ongoing life-extension projects.

AECL will retain all liabilities and obligations relating to pre-closing operations of the CANDU business, while CANDU Energy will take full responsibility for all new projects.

Upfront and Royalty Payments
The upfront payment will be made up of $15 million in cash on closing, with the potential for significant benefits through royalty payments if CANDU Energy is successful during a 15-year royalty period in securing new build and life extension projects. 

Based on assumptions and analysis validated by external financial advisors, from these royalties as well as from the sale of its inventory of heavy water, the Government could realize a net present value in amount of about $285 million.

Ancillary Agreements

Intellectual Property Licence Agreement (IPLA)
The transaction grants CANDU Energy a perpetual licence to use the IP relating to the CANDU business. The licence is exclusive in the power reactor market.  

Subject to non-compete obligations, AECL’s Nuclear Laboratories retains rights to continue to operate and provide services within a limited field of use, including: i) research, development and testing services to Canada and to the CANDU Owners Group, and ii) all services with respect to its own nuclear research facilities.
Enhanced CANDU 6 (EC 6) Support Agreement
This agreement, between AECL and CANDU Energy, sets out the terms of a one-time contribution by the Government of Canada to the development of the EC 6, up to an amount of $75 million. Government funding will be cost-shared 70/30 with CANDU Energy.
Life-Extension Project (LEP) Subcontract
AECL will have outstanding contractual obligations with regard to five life-extension project contracts, which will be subcontracted by AECL to CANDU Energy; and all other obligations will be retained by AECL. 

CANDU Energy will be compensated for all remaining work in completing the various LEPs on the basis of an agreed-upon cost formula, which includes compensation for all direct costs, increased by negotiated mark-ups.
Intercompany Services
AECL Nuclear Laboratories will provide services, on a commercial basis, to CANDU Energy post-closing. The agreement is expected to generate revenue during its five-year term. AECL could be asked to provide various services including: Shielded Facilities, Reactor Chemistry and Systems Engineering.
Transition Services Agreement
A Transitional Services term sheet has been agreed to at signing, with a full agreement being entered into as a condition of closing, if still needed by then. The preferred scenario is to make both organizations autonomous by closing.
Parent Guarantee
CANDU Energy being a newly created subsidiary consisting primarily of the transferred assets from this transaction, its corporate parent, SNC-Lavalin, will be providing a parent guarantee to secure performance of key obligations of CANDU Energy in the transaction.  
Pension Plans Participation Agreement
At closing, the Government of Canada and CANDU Energy will enter into a Pension Plans Participation Agreement, which will permit the transitioned employees to continue to contribute to their pension plans for a transitional period of up to three years, and will determine CANDU Energy’s obligations to make the employer’s contribution with respect to the pension plans. 

In addition, the transitioned employees will be eligible, upon retirement, to opt for coverage under the Public Service Health Care Plan (PSHCP), as is currently the case. 

International Support

Natural Resources Canada and the Department of Foreign Affairs and International Trade confirm that CANDU Energy will have access to Government agencies and programs, as available to any Canadian exporter, in support of its international activities. Such requests will be assessed on merits on a case-by-case basis.

Julie Di Mambro
Press Secretary
Office of the Minister
Natural Resources Canada


Media Relations
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