Saipem’s cash call wobbles as investors dump shares, rights

(Reuters) – Investors dumped shares in Saipem (SPMI.MI) on Tuesday as well as the rights to buy into the Italian energy services group’s 2 billion euro ($2 billion) cash call, heightening risks for banks that agreed to mop up any unsold shares.

Saipem is tapping investors after a shock profit downgrade in January driven by deteriorating margins on contracts including offshore wind. read more

The capital increase runs until July 11.

Joint global coordinators BNP Paribas, Citi, Deutsche Bank, HSBC, Intesa Sanpaolo, UniCredit and joint bookrunners ABN AMRO, Banca Akros, Santander, Barclays, BPER, Goldman Sachs, SocGen and Stifel have all agreed to guarantee the issue.

Underwriters were counting on high crude oil prices and Saipem’s good turnaround progress to place the new shares with investors, said a banker at one of the firms in the consortium.

The source requested anonymity as the offering is ongoing.

However, with markets rocked by the impact of inflation, rising interest rates and the threat of recession, finding buyers for new Saipem shares is proving a tall order.

“The market backdrop wasn’t ideal to take on this kind of transaction, but Saipem couldn’t wait,” Bestinver analyst Marco Opipari said.

“The deal has not gone down well with investors and I believe a large part of the capital increase will be underwritten by the consortium of guarantor banks,” he added.

In its plan to 2025, Saipem plans to focus on its legacy offshore engineering and construction (E&C) business. Liquefied natural gas will be a focus for onshore business at a time when a rush to secure more oil and gas after Russia’s invasion of Ukraine is reshaping the energy market.

The group’s leading shareholder, oil and gas group Eni (ENI.MI) and state lender CDP, have pledged to buy into the cash call to keep their combined 43% stake unchanged, leaving investment banks on the hook for the rest.

Saipem is selling new shares at a price of 1.013 euros each and a ratio of 95 new shares for every single ordinary and savings share held.

The rights to buy new shares at such terms cannot change hands after Tuesday.

The rights plunged as much as 99% on their last day of trading. By 1107 GMT the rights fell 74.4% at 0.0499 euros each.

Shares in Saipem dropped 10% at 2.317 euros each, against a 1% fall in the European sector (.SXEP).

The stock has lost half its value year to date, lowering Saipem’s market capitalisation to just over 5 billion euros, Refinitiv data show. ($1 = 0.9714 euros)

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