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

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  • 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
  • LNG will be in focus as Ukraine crisis reshapes market

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 significant deterioration in margins on contracts, including offshore wind.

The downgrade comes just three months after chief executive Francesco Caio presented the group’s business plan.

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Asked about his stance, Caio said he plans to continue working with his team. “We are seeing growing momentum for energy infrastructure around the world,” he said.

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

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.

Saipem, advised by Rothschild, hopes to raise more than 1.5 billion euros through the sale of assets, including onshore drilling where discussions with a leading international operator are advanced.

“The exclusivity expires at the end of May (…) and the aim is to finalize the deal this year,” chief executive Alessandro Puliti told analysts, adding that the value was over 500 million euros.

The group also intends to raise funds through sale-leaseback agreements involving its fleet, he said.

NEW DIRECTION

In its new plan to 2025, Saipem plans to cut costs and focus more on its legacy offshore engineering and construction (E&C) business, where it expects 8% annual growth, particularly in the Middle East. East and Africa.

Liquefied natural gas will be at the center of onshore activity at a time when a global scramble for more oil and gas following Russia’s invasion of Ukraine is reshaping the energy market.

“Now LNG is even more important…a key part of diversification for many countries,” Puliti said. Read more

Saipem said it was not considering acquiring new contracts in Russia where it has four projects underway, including Novatek’s giant Arctic LNG 2.

“There are no outstanding payments. We will close our engagement,” Puliti said.

The energy transition will remain important, but the group will retain its ambitions for the next two years by focusing on its lower-risk offshore wind activity.

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, when it posted a net loss of 2.47 billion euros.

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 down 3.7% at 1425 GMT. ($1 = 0.9070 euros)

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

Our standards: The Thomson Reuters Trust Principles.

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