Saipem Is Said to Explore $4.5 Billion Survival Package
Saipem Is Said to Explore $4.5 Billion Survival Package
(Bloomberg) -- Saipem SpA is considering a roughly 4 billion-euro ($4.5 billion) restructuring package that could include a cash injection and asset sales, according to people familiar with the matter, in the wake of a shock profit warning.
The Italian engineering firm is exploring plans for a capital increase of about 2 billion euros and also negotiating with banks to extend a 1 billion-euro credit facility, the people said. It’s also working with advisers on the potential sale of one of its drilling divisions, they said. A drilling sale could raise 1 billion euros, one of the people said.
Deliberations are ongoing and no final decisions on a capital hike, financing extension or any divestments have been taken, according to the people, who asked not to be identified discussing confidential information. A representative for Saipem declined to comment.
Milan-based Saipem, led by Chief Executive Officer Francesco Caio, has been struggling to cope with lower energy demand and sagging investments, with many oil projects delayed during the Covid-19 pandemic. Efforts to shift its portfolio toward green-energy projects have also faced delays.
In January, the company said it would be evaluating a capital increase and speaking with its creditors after issuing a profit warning. Saipem’s two main shareholders -- state lender Cassa Depositi e Prestiti SpA and oil and gas company Eni SpA, which is also state-controlled -- have been closely monitoring the situation.
The company has 500 million euros of bonds coming due in early April.
Saipem bonds due 2025 extended gains after the report on Wednesday. The notes rose 5.6 cents on the euro to 89.5 cents, according to data compiled by Bloomberg.
Shortly after the profit warning, Saipem overhauled its management in a bid to restructure its business. Eni’s Alessandro Puliti was appointed general manager, while CDP’s Paolo Calcagnini was installed to lead a new unit responsible for strengthening financial planning and control, according to a statement.
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