Saipem’s main investors and banks will advance 1.5 billion euros in cash call – sources

  • Conditions not right to launch fundraising now – sources
  • Eni will guarantee a bridge loan of 855 million euros by the banks – sources
  • Part of the advance to be used for the maturity of 500 million bonds – source
  • The head of the CDP “confident” on the search for a solution

MILAN, March 23 (Reuters) – Leading investors in Saipem (SPMI.MI), Eni (ENI.MI) and CDP, along with a pool of banks, are ready to advance 1.5 billion euros on a raise of aggregate capital of 2 billion euros to rescue Italy’s struggling energy services group, 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 demand loan provided by a pool of eight banks worth 855 million euros ($941 million).

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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.

On Wednesday, CDP chief executive Dario Scannapieco said he was confident Saipem would find a solution.

Saipem shares, which have lost more than 40% since the beginning of the year, appreciated by 7.4% at the end of the session.

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. Read more

He must unveil his recovery plan and his rescue plan on Friday.

BOARD MEETINGS

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 banks providing the bridge loan, which will be repaid when the fundraising is launched, are also likely to form the consortium for the capital raise, one of the sources said.

Sources said the banks were worried about taking too much risk and were looking for collateral.

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 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. ($1 = 0.9091 euros)

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Reporting by Andrea Mandala, Stephen Jewkes, Giuseppe Fonte; edited by Richard Pullin and Keith Weir

Our standards: The Thomson Reuters Trust Principles.

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