Saipem shares fall below issue price as banks prepare to sell shares

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A Saipem logo is seen on the bridge of the deep water drilling ship Saipem 10000 in the port of Genoa, Italy, November 19, 2015. REUTERS/Alessandro Garofalo

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MILAN, July 15 (Reuters) – Shares of Saipem (SPMI.MI) fell below the issue price for new shares on Friday in a hyper-dilutive cash call that fell short of the 2 billion euro ($2.01 billion) target ) lagged behind, which the Italian energy companies had targeted. The company was looking for investors to shore up its finances.

By 1000 GMT, Milan-listed shares fell 26.5% to €0.86, while Saipem sold its new shares at €1.013 each.

The company said on Friday that the underwriters had completed the purchase of nearly €600 million worth of new shares that remained unsold after raising just 70.4% of the capital raise’s target amount. Continue reading

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Banks will now start selling Saipem shares, but with such a large stake in their hands and a falling market price, the process may not prove easy.

Bestinver analyst Marco Opipari said overall market conditions are not favourable.

“Banks can afford to sell shares even below the issue price, but not too much as they would wipe out their earnings in fees,” he said.

“If conditions are not good enough, the banks could pause the selling process, but every time shares approach $1,013 they will resume selling, so we can see that as a cap for now.”

According to the sales prospectus, the banks will share around 51 million euros in fees for participating in the Sapiem capital increase. The total cost of the cash call, including other fees, was estimated at a maximum of EUR 80 million.

BNP Paribas, Citigroup, Deutsche Bank, HSBC, Intesa Sanpaolo and UniCredit were the joint global coordinators of the Saipem issuance. ABN AMRO, Banca Akros, Banco BPM, Banco Santander, Barclays, BPER, Goldman Sachs International, Societe Generale and Stifel were listed as joint bookrunners.

On Friday, Unicredit said BNP Paribas, Citigroup, Deutsche Bank, HSBC, UniCredit, ABN AMRO, Barclays and Stifel, who now own nearly 400 million Saipem shares, had reached an agreement to conduct an “orderly” sale of their shares reach.

The stake represents 67.8% of the shares bought by banks and around 19% of the target amount in the call.

After a surprise profit warning in January that prompted the company to seek funding from investors, Saipem unveiled a new business plan in March.

As part of the strategy, the group, which is controlled by energy group Eni (ENI.MI) and Italy’s state lender CDP, pledged to cut costs, sell assets and focus more on its legacy offshore engineering and construction (E&C) business. read more ($1 = 0.9975 euros)

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Reporting by Giulio Piovaccari Editing by Keith Weir

Our standards: The Thomson Reuters Trust Principles.

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