Eni Sells Saipem Stake, Expects to Collect €6.5 Billion
Italy’s Eni executed a sale and purchase agreement to sell a 12% stake in Saipem to Fondo Strategico Italiano, as part of a plan designed to collect €6.5 billion.
The Milan-headquartered company explained that the two companies also entered into a second agreement ‘aimed at stipulating the full repayment of the debt of Saipem Group’s vis-a-vis the Eni Group.’ The sale and purchase agreement should bring Eni around €0.4 billion, while the majority (€6.1 billion) should come from the repayment of Saipem’s debts.
Eni said it wants to use the additional financial flexibility to increase its focus on upstream operations.
“The additional financial resources will be used to develop the very significant oil and gas reserves we have discovered over the past few years and to strengthen our balance sheet in line with our targets. By subscribing in full to the rights issue, we also reaffirm our belief in Saipem’s strategy potential” Eni’s CEO, Claudio Descalzi, said in a note released on Wednesday.
Saipem will then promote a capital increase of up to €3,500 million, expected to be completed by March 2016. The financial operations should drastically impact on Saipem’s gross debt, which should go down to €3,200 million at the closing.
Eni also wrote that the Sale and Purchase Agreement will be terminated in the event that the capital increase is not settled by 31 May 2016 and if the outstanding debt of Saipem Group to the Eni Group is not repaid in full by 30 June 2016.
The news was warmly welcomed by financial markets. Saipem’s share price jumped more than 10% on Wednesday.
“The capital raise of up to €3.5 billion, strongly supported by Eni and Fondo Strategico Italiano, will bring our net debt back in line with our peers, at a level which I believe will secure an investment grade credit rating and therefore obtaining a competitive rate for the refinancing of €3.2 billion of outstanding debt. This provides a strong financial platform on which to build Saipem’s future” Stefano Cao, Saipem CEO, commented on Wednesday.
Saipem also released the results for the third quarter, reporting a y-o-y 12% decrease in revenues and new contracts on last year’s levels.
“Saipem results for the third quarter of 2015 were in line with the same period of 2014, despite the deeply deteriorated market scenario” Cao said in a separate press release.