Saipem, here are the moves of Eni and Cdp after the 2021 disaster of Caio
Saipem: loss-making accounts, the capital increase that will be covered by Eni and CDP, cost interventions, bank refinancing, effects on the stock market. Facts, numbers and comments
Morning on the swing for Saipem in Piazza Affari: the shares of the group are now in the queue at the Ftse Mib with a drop of 4.2% to 1.048 after having risen by more than 3% at the start.
The reason for the roller coaster? The accounts released today by the group controlled by Eni and Cdp.
HOW DO THE SAIPEM ACCOUNTS GO
In 2021, Saipem – led by the CEO, Francesco Caio, in fact recently commissioned by Eni and Cdp – in fact lost almost 2.5 billion and the board of directors approved a financial maneuver that provides for a 2 billion capital increase and an agreement with the banks for some credit lines, as well as a review of the industrial plan with interventions on overhead costs for over 150 million in 2022 and for a further 300 million when fully operational from 2024.
THE NEXT MOVES
Alongside these measures, further actions are planned that could bring in another 1.5 billion euros, starting with the sale of the onshore drilling activities for which there is an exclusive negotiation.
WHO IS WORKING FOR SAIPEM
Together with the advisor Rothschild Saipem is preparing the financial restructuring maneuver, with the new general manager Alessandro Puliti, wanted by Eni (30.54% of the capital) to support the managing director Francesco Caio, and by the financial supervisor Paolo Calcagnini, indicated by Cdp (12.55%), alongside the CFO Antonio Paccioretti.
THE PRICES OF SAIPEM
Saipem's prices have lost almost 40% since the beginning of the year after the company had issued a profit warning after revising the order book obtained with a negative impact on 2021 adjusted EBITDA of one billion euros due for 580 million to offshore projects wind and around 440 million to onshore E&C projects.
ENI AND CDP'S INTERVENTION ON SAIPEM
The consequences of this operation on the accounts have led to the need for a financial maneuver which provides – as mentioned – a capital increase of € 2 billion by Eni and Cdp and an agreement with the banks for some credit lines ( Intesa Sanpaolo and Unicredit in the forefront of the operation ) as well as a revision of the industrial plan with interventions on overhead costs for over 150 million in 2022 and for a further 300 million when fully operational from 2024. With the new plan, the group estimates an average annual increase in revenues by 15% between 2021 and 2025 and an adjusted EBITDA of over 500 million in 2022 and to rise to over 1 billion at the end of the plan.
THE OTHER MEASURES
Alongside these measures, further actions are planned that could bring in another 1.5 billion euro, starting with the sale of the onshore drilling activities for which there is an exclusive negotiation.
THE ANALYSTS OF EQUITA
Equita Sim analysts judge the large size of the increase, which will however be very dilutive for minority shareholders (Saipem capitalizes 1.1 billion on the stock market), the imminent sale of assets is also good. However, the broker points out that 2022 will still be heavily impacted by the forecasts on the backlog and that the reduction in financial leverage will mainly take place in the second part of the plan also due to the decline in programmed investments.
BESTINVER REPORT
For Bestinver, the restructuring plan is in line with what was anticipated by the press but "although the scenario of the sector has become very favorable with the sharp increase in oil prices, we do not believe that the market is willing to discount the targets of long term ": for the term investment house the multiples Saipem deals with are already to be considered high to the sector average and it is too early to take a constructive position on the stock in light of such a dilutive capital increase.
THE JUDGMENT OF AKROS
For Banca Akros (the institute will work as a joint bookrunner), the expected revenue growth is consistent with the trend in oil and gas prices and with the increase in investments in E&P.
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HERE'S THE DETAILS OF THE DECISIONS OF SAIPEM'S BOARD:
Saipem's Financial Maneuver provides for immediate liquidity intervention, for a total amount of € 1.5 billion, of which € 645 million will be paid by 31 March 2022, by way of "Payment into the Future Capital Increase Account" by part of the shareholders who exercise joint control over the Company, Eni and CDP Industria
Saipem's Board of Directors approved the update of the 2022-25 Strategic Plan and the maneuver to strengthen the Company's financial and equity structure. What does it foresee?
2 BILLION CAPITAL INCREASE
The financial maneuver provides for a capital increase of 2 billion euros, which is expected to be completed by the end of the year. And the shareholders ENI and CDP have undertaken the commitment to underwrite a total of approximately 43% of the share capital increase, in proportion to the shareholdings respectively held in the company's capital; the remaining part of approximately 57% is covered by a pre-underwriting agreement with leading Italian and international banks.
AGREEMENTS SIGNED TO FACE LIQUIDITY NEEDS
The company has in fact signed agreements to meet short-term liquidity needs for € 1.5 billion, of which € 645 million made available by ENI and CDP as payments for future capital increases, and for € 855 million euros from a pool of banks as a loan.
THE STRATEGIC PLAN: FOCUS ON ASSET OFFSHORE, DRILLING AND WIND
The update of the strategic plan is based above all on an offshore E&C, for which a 2021-25 CAGR of 8% is expected, driven by the recovery of both the conventional and SURF sectors, in particular in the Middle East and Africa, on drilling offshore, with a 2021-25 CAGR of 16% expected on a global scale and on an offshore wind, considered a large market with strong growth potential at a 2021-25 CAGR of more than 30%.
The plan continues with the acceleration of the efficiency plan with a reduction in overhead costs of over € 150 million in 2022 and with a run-rate of over € 300 million in 2024. And from 2022 adjusted EBITDA forecasts to over 500 million euros, and double-digit revenue margin from 2024; 2025 adjusted EBITDA forecast at over 1 billion euros, with free cash flow in 2025 of around 700 million euros.
FROM ASSET MONETIZATION, CONTRACT RENEGOTIATION AND ENHANCEMENT OF BUSINESS DRILLING ONSHORE ADDITIONAL 1.5 BN
In addition to the acceleration of the plan to reduce fixed costs and the optimization of the industrial footprint at an international level, included in the plan targets, additional actions have been identified (not included in the 2022-25 Plan) that could provide potential additional liquidity for over 1.5 billion euros. These additional actions include the monetization of assets, the renegotiation of existing contracts and the enhancement of the onshore drilling business. With regard to the enhancement of onshore drilling, Saipem is negotiating on an exclusive basis with a leading international operator.
THE FINANCIAL MANEUVER: 2 BILLION CAPITAL INCREASE BY YEAR END
The revision of the 2022-25 Strategic Plan lays the foundations for the maneuver to strengthen Saipem's financial and equity structure. The Financial Maneuver is therefore articulated in addition to a capital increase of 2 billion euros by the end of the year in a new RCF line of up to 1 billion euros, which will be organized within the start of the capital increase and compliance to which 7 banks participating in the Financial Maneuver have confirmed that they have preliminarily approved the investment for approximately 450 million euros. But also in lines of signature on a bilateral basis by banks participating in the Financial Maneuver for a total amount of approximately € 1.35 billion.
In this context, "also in order to support the Company's short-term financial needs, up to the completion of the capital increase, the Financial Maneuver provides for immediate liquidity intervention, for a total amount of 1.5 billion euros" Saipem explains, adding that 645 million euros will be paid by 31 March 2022, by way of "Payment into the Future Capital Increase Account" by the shareholders who exercise joint control over the Company, Eni and CDP Industria while for the amount residual, according to timelines substantially similar to the intervention of the Shareholders that precedes and subordinate to this intervention, through financial support from leading Italian and international banks. These are Banco BPM SpA, BNP Paribas, Citibank, NA, London Branch, Deutsche Bank SpA, HSBC Continental Europe, Milan Branch, Illimity Bank SpA, Intesa Sanpaolo SpA and UniCredit SpA
Following the Financial Maneuver including the capital increase of two billion euros, the Group expects a consolidated net financial position of approximately 800 million euros at the end of 2022. Thanks to the expected evolution of the business and the contribution of financial resources from the maneuver, a net financial position close to zero is expected at the end of 2025.
In particular, the increased focus on the acquisition of offshore activities, both E&C and drilling, "characterized by higher margins thanks to Saipem's consolidated competitive position". The Group will increase its commercial focus on the offshore E&C and offshore Drilling markets, “for which strong growth is expected. These segments have historically shown high margins for Saipem ”. And again, the company underlines "in the offshore E&C and drilling markets, the Group can count on a competitive advantage that derives from its highly technological fleet, from the experience gained in key geographies and from the proven reputation acquired over the years with major customers. in the energy sector. Greater selectivity in the acquisitions of the onshore E&C business, favoring contracts with a higher technological content in the LNG and gas valorization segments, in which Saipem can leverage proprietary technologies ".
The Group will also adopt greater commercial selectivity in the onshore E&C business, “with a view to reducing risks and focusing on the generation of value, with respect to volumes. The reduction of exposure is expected in segments characterized by high competition and a refocusing in contexts where Saipem can play a leading role, such as LNG and gas valorization (Urea and Ammonia plants), leveraging its own references, local content and technological offer owner ". In the 2022-25 horizon, Saipem has an onshore E&C project acquisition plan of approximately 15 billion euros, down by 14% compared to the October 2021 plan. And a repositioning on low-risk activities in offshore wind for 2022 -23, in addition to the adoption of a renewed commercial and executive strategy to capture the growth potential of the market in the second part of the Plan.
2021 CONSOLIDATED FINANCIAL STATEMENTS APPROVED
With Revenues of 6,875 million euros (7,342 million euros in 2020), a negative adjusted EBITDA of 1,192 million euros (positive for 614 million euros in 2020) with a loss of 901 million euros in the fourth quarter which was impacted by The result of the backlog review on E&C projects weighed on the fourth quarter and the year for 1,020 million euros, an adjusted operating result (EBIT) 2021 negative for 1,713 million euros (positive 23 million euros in 2020) and a net result with a loss of 2,467 million euros (loss of 1,136 million euros in 2020), Saipem also approved the 2021 financial statements. at 31 December 2020), an improvement compared to the third quarter (1,673 million euros) but also the acquisition of new orders in 2021 for 7,208 million euros (8,659 million euros in 2020), the acquisitions of the fourth quarter, of o l more than five times higher than those of the third quarter, which confirmed the expectations of recovery of investments in Oil & Gas. The 2021 financial statements of Saipem SpA closed with a loss of 2,382 million euros and a limited exposure of the year-end backlog for projects in Russia, which weighs about 1% on the IFRS backlog and about 8% on the backlog including unconsolidated companies.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/saipem-ecco-le-mosse-di-eni-e-cdp-dopo-il-disastro-2021-di-caio/ on Fri, 25 Mar 2022 09:20:15 +0000.