Saipem’s main investors and banks advance 1.5 billion euros in cash calls | The mighty 790 KFGO
By Andrea Mandala and Stephen Jewkes
MILAN (Reuters) – Leading investors in Saipem, Eni and CDP, along with a pool of banks, are ready to advance 1.5 billion euros of an overall capital raise of 2 billion euros to save the group struggling Italian energy service company, two sources said.
The two investors, bound by a shareholders’ agreement, will pre-award most of their share of the planned cash call by injecting more than 600 million euros, said one of the sources.
At the same time, Eni, which owns 30.4% of Saipem, will temporarily guarantee a bridging loan granted by a pool of eight banks worth 855 million euros.
State-owned commercial credit insurer SACE is then expected to step in, at a later date, to underwrite the bridge loan when it has had time to process complex paperwork, two sources said.
Saipem surprised investors in January when it cut its profits by a billion euros due to a sharp deterioration in margins on some contracts, sending its shares tumbling.
In February, it announced it would cut costs, sell assets and scale back its green ambitions to focus more on its core oil and gas business after plunging into the red last year.
He must unveil his recovery plan and his rescue plan on Friday.
Saipem shares, which have lost more than 40% since the start of the year, were up 6.4% at 11:22 GMT.
The sources said that the conditions were not in place for the capital increase to be carried out at the moment due to market volatility after Russia’s invasion of Ukraine, adding that it could be launched after summer.
The boards of Eni and CDP are due to meet later on Wednesday to approve the package which will then be discussed by Saipem’s board on Thursday, the sources said.
Eni, CDP and Saipem declined to comment. According to one of the sources, part of the 1.5 billion euros will be used to honor a 500 million euro bond which matures in early April, even if Saipem has cash to cover it.
Saipem’s remaining bond portfolio, comprising four bonds for a total of 2 billion euros, will not be refinanced but may run to maturities between 2023 and 2028, the source said.
A revolving credit facility in the amount of 1 billion euros, which was due to mature at the end of 2023, could be extinguished early and replaced by an identical line with a maturity of three years, indicated one of the sources.
But the source added that it was still under discussion.
(Reporting by Andrea Mandala, Stephen Jewkes, Giuseppe Fonte; editing by Richard Pullin and Keith Weir)