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Saipem delisting? Italian oil services giant SPMI on the brink after cash call shortfall

Saipem delisting? Italian oil services giant SPMI on the brink after cash call shortfall

 

A possible delisting of the Italian energy service company Saipem (SPMI)  hoved into view last week after a mishandled cash call saw the firm’s stock price tumble.

Saipem saw its stock price crater on 12 July, plunging 48.6% after markets baulked at its demands for a €2bn cash call.

Saipem provides infrastructure services to the oil and gas sector and its major shareholder, and previous owner is Italian energy major Eni.

ENI

However, despite rising oil and gas prices globally this year the embattled energy services group failed to convince investors that its turnaround plans can succeed.

As a result Saipem announced on 11 July that it had only raised 1.4bn euros ($1.4bn) - or roughly 70% of the planned 2bnEUR.

Why didn’t investors back Saipem?

The Italian’s firm’s woes date back to a profit warning it issued in January which wrong footed the markets.

The firm’s executives tried to refloat the business with a restructuring plan in March.

This aimed to slash costs and refocus on the group’s legacy business. It also included the hyper-dilutive capital raise.

Hyper-dilutive means that existing shareholders will see their share of company ownership reduced by a firm issuing more stock.

US Crude Oil Spot

The savage fall in Saipem’s share price raised the prospect of the firm’s delisting from the Italian stock exchange, the Borsa Italiana which is based in the country’s financial capital of Milan.
Why could Saipem be delisted?

The rules for involuntary delisting vary between exchanges, some may state a minimum stock price for example.

But a common key factor is meeting minimum financial standards and if Saipem’s share price rollercoaster  - its value has fallen roughly 75% so far this year - could put the firm in breach of this.

The last company to delist from the Borsa Italiana was recycling firm RDM group in December 202, following its takeover by Rimini Bidco.

Will Saipem be next?

Read the latest issue of the OGV Energy magazine HERE

Published: 19-07-2022

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