Saipem raises initial 1.4 billion euros in capital increase

MILAN (Reuters) -Italy’s Saipem has raised around 1.395 billion euros ($1.4 billion) to stabilise its finances, the energy services group said on Monday, adding that investors subscribed around 70% of the new shares it was issuing in a cash call.

Last month Saipem launched a 2 billion euro hyper-dilutive capital increase, which was open until Monday, as part of a plan to try to get back into the black and refocus its business after a surprise profit warning in January.

A pool of banks has pledged to subscribe any unexercised rights to guarantee the full amount of the capital increase is covered.

As committed, energy group Eni and state lender CDP, which control Saipem with a combined 44% stake, have fully subscribed their share of the capital hike, Saipem said in a statement.

Saipem said it would offer unexercised rights on the Italian stock exchange for two days starting from Tuesday, with the subscription of the relevant shares to be completed by 1200 GMT on Thursday.

It will announce the final outcome of the cash call by the market opening on Friday.

In January the company downgraded earnings by one billion euros due to a significant deterioration of margins on contracts including offshore wind.

Saipem offered investors its new shares at an issue price of 1.013 euros each at a ratio of 95 new shares for every one ordinary or savings share held.

Saipem shares have been trading above the subscription price throughout the offer period due to the structure of the capital increase, which has made it impossible for investors to short the stock.

On Monday they closed up 5.25% at 3.789 euros.

Saipem last issued new shares in 2016, raising 88% of the targeted 3.5 billion euros.

Under a new plan to 2025, the company has promised to cut costs and focus more on its legacy offshore engineering and construction (E&C) business where it expects annual growth of 8%, especially in the Middle East and Africa.

Last month it announced the sale of its onshore drilling business to Britain’s KCA Deutag (KCAD) for $550 million, a move that was also part of the turnaround plan.

Between Saipem’s profit warning in January and an all-time low hit at the end of June at 0.7583 euros, shares in the company have lost around 75% of their value. Since then, they have bounced back to briefly surpass the 4 euro threshold last Friday.

($1 = 0.9921 euros)

(Reporting by Giulio Piovaccari, editing by Gianluca Semeraro, Keith Weir and Susan Fenton)