Investing
Saipem shares fall below issue price as banks prepare for stake sale
Global Banking & Finance Review®
Company
By Giulio Piovaccari
MILAN (Reuters) -Shares in Saipem on Friday tumbled below the issue price for new stock in a hyper-dilutive cash call that fell short of the 2 billion euro ($2.01 billion) target the Italian energy services firm sought from investors to shore up its finances.
By 1000 GMT Milan-listed shares were down 26.5% at 0.86 euros, while Saipem sold its new shares at 1.013 euros each.
The company said on Friday that underwriting banks had completed the purchase of new shares, worth almost 600 million euros, left unsold after it raised just 70.4% of the targeted amount in the capital increase.
Banks will now start selling Saipem shares, but with such a big stake on their hands and a falling market price, the process might not prove easy.
Bestinver Analyst Marco Opipari said overall market conditions were not favourable.
“Banks can afford to sell shares even below issue price, but not too much, as they would erase what they earned with fees,” he said.
“If conditions are not good enough banks might pause the sale process, but every time shares approach 1.013 euros they will restart sales, so we can see that as a cap at the moment.”
Banks are sharing some 51 million euros in fees for being part of the Sapiem capital increase, according to the deal prospectus. The total cost of the cash call including other fees was estimated to be a maximum of 80 million euros.
BNP Paribas, Citigroup, Deutsche Bank, HSBC, Intesa Sanpaolo and UniCredit were the joint global coordinators of the Saipem issue. ABN AMRO, Banca Akros, Banco BPM, Banco Santander, Barclays, BPER, Goldman Sachs International, Societe Generale and Stifel were listed as the joint bookrunners.
On Friday Unicredit said that it, BNP Paribas, Citigroup, Deutsche Bank, HSBC, UniCredit, ABN AMRO, Barclays and Stifel, now owning almost 400 million Saipem shares, had entered an agreement to achieve an “orderly” sale of their stakes.
The stake corresponds to 67.8% of shares bought by banks and around 19% of the targeted amount in the call.
After a surprise profit warning in January, which led the company to seek funds form investors, Saipem presented a new business plan in March.
As part of the strategy the group, controlled by energy major Eni and Italy’s state lender CDP, promised to cut costs, sell assets, and focus more on its legacy offshore engineering and construction (E&C) business. ($1 = 0.9975 euros)
(Reporting by Giulio PiovaccariEditing by Keith Weir)
Equity refers to the ownership interest in a company, represented by shares of stock. It signifies the value of an owner's stake in a business after all liabilities have been deducted.
A financial crisis is a situation where the value of financial institutions or assets drops significantly, often leading to widespread economic disruption and loss of confidence in the financial system.
Investment is the act of allocating resources, usually money, in order to generate income or profit. It can involve purchasing stocks, bonds, real estate, or other assets.
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