What will the Saipem capital increase be like
Because the terms of the capital increase communicated by Saipem do not like the stock market. Facts, numbers and comments
Saipem sinks on the stock market.
The Italian energy infrastructure group has been readmitted to trading in Piazza Affari after a downward freeze but is losing 17.2% to 34.87 euros.
"The stock suffers after the announcement of a 30% discount on the Terp, the theoretical price ex-law, set for the 2 billion euro capital increase that is the pivot of the recovery plan to 2025, in response to a loss of 2.4 billion recorded last year. Since the beginning of the year, the stock has sold over 59% of its value ”, reports Ansa .
Saipem's Board of Directors exercised the mandate to increase the share capital indivisibly by 2 billion euros, setting final terms and conditions. This is double its market capitalization, at a heavily discounted price of 1 euro per share.
The company led by Francesco Caio thus tries to strengthen its finances and reorient the business after the withdrawal of the 2021 guidance . On January 31, Saipem withdrew the outlooks released the previous October and made it known that it plans to close the statutory financial statements for the 2021 financial year with losses exceeding one third of its share capital.
The move is part of a group's plan to recover after the profit warning (the third) due to a significant deterioration in margins on contracts, including offshore wind, Reuters points out. In fact, last month Saipem signed the contract for the announced sale of onshore drilling to the British oil & gas service company KCA Deutag. The company says it wants to focus on offshore drilling, believing the transaction will improve liquidity and reduce net debt.
Expected until 11 July, the capital increase is inseparable, therefore it will be completed only if fully subscribed. Hence the doubts of the analysts.
All the details.
THE CAPITAL INCREASE
According to the note from the oil service controlled by Eni and Cdp Industria, the increase will take place through the issue of 1,974,327,430 Saipem ordinary shares, with no expressed par value, with entitlement to be offered as an option to ordinary and savings shareholders in the ratio of 95 new shares for every 1 ordinary or savings share owned, at the subscription price of € 1.013 for each new share.
THE TIMING
The calendar of the Offer provides that the option rights valid for the subscription of the new shares can be exercised, under penalty of forfeiture, from 27 June 2022 to 13.00 on 11 July 2022, inclusive and can also be traded on the Euronext Milan regulated market. organized and managed by Borsa Italiana from 27 June 2022 to 5 July 2022, inclusive.
A DISCOUNT OF ABOUT 30% ON THE TERP
The issue price of the new shares incorporates a discount of approximately 30% with respect to the theoretical ex-right price (TERP) of Saipem ordinary shares, calculated on 21 June 2022. "The theoretical ex-right price of a security is the theoretical price of a after the detachment of the option right relating to a capital increase ”, explains MF .
“Investors who bought the option rights during the offer period could realize a loss equal to the investment made to acquire those rights,” the company emphasizes.
THE COMMITMENT OF ENI AND CDP INDUSTRIA
As already disclosed to the market, the shareholders Eni and Cdp Industria have irrevocably committed to subscribe all the new shares due to them in proportion to the investments respectively held in Saipem, totaling approximately 44% of the capital increase.
In fact, last March Saipem announced that its two main shareholders and the banks will anticipate € 1.5 billion of the capital increase.
THE RED OF 2021
The capital increase is part of the company's restructuring plan.
In 2021 Saipem – led by the CEO, Francesco Caio, de facto police station by Eni and Cdp (here the reconstruction of Startmag ) – in fact lost almost 2.5 billion.
SAIPEM'S STRATEGY WITH THE 2022-2025 PLAN
Therefore, in March the board 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 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.
Saipem said it plans to cut costs and focus more on its offshore E&C business. “In the offshore E&C and drilling markets, the Group can count on a competitive advantage that derives from its highly technological fleet,” underlined the company.
With the new plan, the group estimates an average annual revenue increase of 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 OPINION OF THE ANALYSTS
But analysts remain skeptical.
"Economic uncertainty, volatility and Saipem's complicated history could lead investors to be wary," said Reuters Breakingviews . “The fact that Saipem has warned that it can cancel the rights issue at the last minute could also discourage some shareholders. However, Saipem should benefit from the growing demand for oil and gas services in the post-Ukrainian energy boom period ”.
Today the analysts of Banca Akros "recall that the capital increase represents a key factor for achieving the objectives of the 2022-2025 strategic plan which presupposes a compound annual growth (CAGR) of 15% in terms of revenues and a constant recovery of margins ”writes MF .
“The stock will be subject to high volatility because those who intend to subscribe to the rights will have to cover themselves by Friday, while those who do not want to are forced to sell them. The increase is hyper-dilutive and, moreover, concerns the fact that it has been emphasized that it is inseparable and that in the very remote case in which it is not fully subscribed, there will be no delivery of the shares and the investor could realize a loss for the acquisition of these rights ”, Marco Opipari, an analyst at Bestinver, told Reuters .
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/come-sara-laumento-di-capitale-di-saipem/ on Wed, 22 Jun 2022 14:03:13 +0000.