Saipem launches €2bn cash call and sells assets as part of rescue plan

A Saipem logo is seen on the deck of the deepwater drilling vessel Saipem 10000 in the port of Genoa, Italy, November 19, 2015. REUTERS/Alessandro Garofalo

Join now for FREE unlimited access to Reuters.com

Register

  • Main investors, banks advance 1.5 billion euros
  • Seeks to raise 1.5 billion euros in asset sales
  • Banks will set up more than 2 billion euros in credit lines

MILAN, March 25 (Reuters) – Saipem (SPMI.MI) will launch a 2 billion euro ($2.2 billion) capital raise this year and sell assets to help fund a turnaround plan to bring the struggling Italian energy services group in the dark.

The company stunned investors in January when it trimmed its profits by a billion euros due to a sharp deterioration in margins on some contracts including offshore wind, sending shares plunging.

Controlled by energy group Eni (ENI.MI) and public lender CDP, Saipem said on Friday that its two main investors and banks would advance 1.5 billion euros of the capital increase, confirming what sources said. to Reuters this week. Read more

Join now for FREE unlimited access to Reuters.com

Register

Eni and CDP, linked by a shareholders’ agreement, will pay 645 million euros while the banks will finance 855 million euros to meet immediate liquidity needs.

“A short-term funding of 1.5 billion euros will be in place by March 31, which is relatively positive,” brokerage Jefferies said.

Saipem, advised by Rothschild, also hopes to raise more than 1.5 billion euros through asset disposals, including onshore drilling where “exclusive negotiations with a leading international operator” are underway.

In its new plan through 2025, Saipem said it would cut costs and focus more on its legacy offshore engineering and construction (E&C) business, where it forecast average growth of 8% through 2025. , especially in the Middle East and Africa.

Gas and liquefied natural gas projects will be the focus of onshore business at a time when a global rush to secure more oil and gas resources after Russia invaded Ukraine could play to Saipem’s key strengths.

“The plan does not envisage the acquisition of new contracts in Russia,” he said, adding that the four projects in the country in his backlog were worth 1.966 billion euros.

RETHINK GREEN

The energy transition will remain a central concern, but the group will retain its ambitions for the next two years by focusing on its lower-risk offshore wind activity. After that, he will use strategic partnerships to help him grow his portfolio.

Saipem, a market leader in subsea E&C, is looking to develop new business areas to meet growing customer interest in green technologies, including offshore wind.

But analysts say renewables require a different set of skills to deliver the kind of return Saipem has gotten from its traditional business.

The adjusted basic result should be above 500 million euros this year after a loss of more than a billion euros in 2021.

The company said it will return to cash generation between 2023 and 2024 with around 700 million euros of cash expected in 2025.

The banks will also set up a new revolving credit facility of up to €1 billion by the start of the cash call and bilateral signature lines worth around €1.35 billion. .

Global coordinators underwriting the cash call include BNP Paribas, Citi, Deutsche Bank, HSBC, Intesa Sanpaolo and UniCredit.

Saipem shares, down more than 40% year-to-date, were up 1.7% at 0840 GMT. ($1 = 0.9070 euros)

Join now for FREE unlimited access to Reuters.com

Register

Reporting by Stephen Jewkes; edited by Agnieszka Flak and Keith Weir

Our standards: The Thomson Reuters Trust Principles.

Comments are closed.