Saipem approves $2.4bn rescue plan
Saipem said March 25 its board of directors had approved a €2.2bn ($2.4bn) cash call and efforts to renew its focus on offshore E&C and drilling after posting a €2.5bn ($2.7bn) annual loss for 2021.
Some €1.5bn of the cash call will come from Saipem's core investors, Eni and state lender CDP, while banks will contribute €855mn to service Saipem's immediate liquidity requirements.
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The cash call came as Saipem confirmed a poor performance at its offshore wind segment had erased €580mn from its 2021 earnings before interest, taxes, depreciation and amortisation (EBITDA).
Bloomberg has reported the deficit was caused by delays on 54 wind turbines contracted to EDF, as well as problems in onshore engineering and construction.
Offshore wind accounted for over half of Saipem's final €1.2bn adjusted EBITDA loss, denting plans to make the sector central to its forward strategy. Around €440mn of the earnings deficit related to onshore E&C projects.
Saipem's directors have also now approved the updated strategic blueprint for 2021 to 2025, focusing more on offshore engineering, construction and drilling contracts while taking a longer-term view on its offshore wind EPC business.
The company now says it will accelerate contract acquisitions in core E&C and drilling segments to maximise profitability in areas where it has "historically" raked in high margins.
In the 2021 to 2025 period, Saipem expects new offshore E&C projects to inject €24bn into its balance sheet, up 14% from the plan it had presented in October 2021. It is predicting an 8% compound annual growth rate for the offshore E&C sector, driven by subsea umbilicals, risers and flowlines, along with conventional E&C services, particularly in the Middle East and Africa.
Offshore wind remains a "higher growth" target market in Saipem's 2021-2025 strategy, with the company envisioning compound annual growth of 30% throughout the period. That's almost double the 16% CAGR projected for offshore drilling.
The capital injection is being underwritten by BNP Paribas, Citi, Deutsche Bank, HSBC, Intesa Sanpaolo and UniCredit.