Saipem launches turnaround plan with capital infusion and asset sales

Italian energy company Saipem said on Friday it will launch a US $2.2 billion capital increase this year and sell strategic assets to fund a turnaround plan that focuses on the offshore E&C and offshore drilling segments.

“Shareholders Eni and CDP are committed to underwrite a total of approximately 43 percent of the capital increase, in proportion to their respective holdings in the company's share capital; the remaining part of around 57 percent is covered by a pre-underwriting agreement with primary Italian and international banks,” Saipem, controlled by Eni, said in a statement.

The company said its two core investors and banks would advance 1.5 billion euros of the capital increase, of which 645 million euros will be provided by Eni and CDP by way of payment on account of future capital increase, and 855 million in financing by a pool of banks.

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

The new plan was approved by the Saipem Board of Directors, chaired by Silvia Merlo, and the financing package is expected to be implemented by the end of the year.

On the drilling segment, Saipem said it would pursue a development path with 2021-25 CAGR of group revenues expected at around 15 percent.

The company will also focus on an accelerated efficiency plan with reduction of structural costs of more than 150 million euros in 2022 and a run-rate of more than 300 million euros in 2024, it said.

The 2022 adjusted EBITDA for the Italian company is expected at over 500 million euros, and double-digit margin on revenues from 2024; while 2025 adjusted EBITDA is expected at more than 1 billion euros, with free cash flow in 2025 of approximately 700 million euros.

Saipem also forecast a strong growth potential for its offshore wind segment at a 2021-25 CAGR of more than 30 percent.