Saipem to launch 2 billion euro cash call, sell assets in rescue plan

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Saipem, controlled by energy group Eni and state lender CDP, said its two core investors and banks would advance 1.5 billion euros of the capital increase, confirming what sources told Reuters.

Eni and CDP, tied by a shareholder pact, will stump up 645 million euros while the banks will fund 855 million euros to help meet short-term liquidity needs.

Saipem said it also expected to raise more than 1.5 billion euros from asset sales, including its onshore drilling business where “exclusive negotiations with a leading international operator” are under way.

Saipem stunned investors in January when it downgraded earnings by a billion euros due to a significant deterioration of margins on some contracts, including offshore wind.

Its net loss last year was 2.467 billion euros.

In its new plan to 2025, it said it would cut costs and focus more on its legacy offshore engineering and construction business where it expected average growth of 8% to 2025, especially in the Middle East and Africa.

“The plan does not envisage the acquisition of new contracts in Russia,” it said. Russian orders currently account for 1% of the groups IFRS backlog.

It said the energy transition remained a focus but said it was repositioning on its low-risk offshore wind business for the next two years.

Saipem, a market leader in subsea E&C, has been looking to develop new lines of business to meet an increasing customer focus on green technologies, including offshore wind.

But analysts say renewable energy requires a different set of skills to guarantee the kind of returns Saipem has achieved from its traditional business.

Adjusted core earnings are expected to be more than 500 million euros this year after a loss of more than 1 billion euros in 2021.

The company said it would return to cash generation between 2023 and 2024 with around 700 million euros in cash expected in 2025.

Banks will also arrange a new revolving credit facility of up to 1 billion euros by the start of the cash call and bilateral signature lines worth around 1.35 billion euros.

($1 = 0.9070 euros)