Eni subsidiary Saipem is asking for up to US$3.8 billion (3.5 billion EUR) in capital from its investors to scale back its debt, as the company reported a 13% drop in revenue in 3Q 2015.
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Image from Saipem. |
According to Saipem, the capital raise is strongly supported by Eni and Fondo Strategico Italiano, who both entered into a deal yesterday (27 October) in which the Italian giant announced it is selling 12.5% interest in Saipem to Fondo Strategico Italiano.
“The capital raise of up to €3.5 billion ($3.8 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 ($3.5 billion) of outstanding debt. This provides a strong financial platform on which to build Saipem’s future,” Stefano Cao, Saipem CEO said.
Revenue for the period came in at $3.4 million, representing nearly a 13% decrease, year-over-year of nearly $3.9 million.
The company’s net took an even bigger dive of almost 30%, dropping from $84 million (€76 million) to $59.7 million (€54 million) this quarter.
Cao said that Saipem’s results were in line, compared to 2014, despite the deeply deteriorated market scenario.
Saipem was able to book $2 billion (€1.8 billion)in new contracts, including the $680 million worth in contracts from Saudi Aramco and Eni Angola awarded earlier this month. However, they only represent a miniscule .05% jump from last year’s bookings.
“We have acted quickly and incisively to downsize the cost base as required by the new oil-price scenario. Over the past few months we have launched a series of initiatives to rationalise our activities, increasing our cost savings target to €1.5 billion ($1.66 billion) by 2017,” Cao said.
In July, Saipem executed a turnaround and a $1.4 million (€1.3 million) cost-cutting program from 2015-2017 that will downsize the company’s Brazilian and Canadian operations, vessels, and implement job cuts. Also in July, the Italian company was accused by Brazilian prosecutors of being connected to the Petróleo Brasileiro (Petrobras) Lava Jato scandal.
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