Flagship investors Eni and CDP, along with a pool of banks, are ready to advance €1.5bn of an overall €2bn capital raise to rescue struggling Italian energy services group Saipem, two sources said on Tuesday.
Energy group Eni owns 30.4% of Saipem while Italian public lender Cassa Depositi e Prestiti (CDP) owns 12.5%.
The two investors will advance most of their share of the planned cash call, while Eni will temporarily guarantee a bridging loan by the banks worth 855 million euros ($943 million), said one of the sources.
State-owned commercial credit insurer SACE will then step in, at a later date, to underwrite the bridge loan when it has had time to process complex paperwork, two sources said.
Conditions are not in place for the capital increase to be completed at this time due to market volatility following Russia’s invasion of Ukraine, the sources said.
Saipem surprised investors in January when it cut its profits by a billion euros due to a sharp deterioration in margins on some contracts, sending its shares tumbling.
In February, it announced it would cut costs, sell assets and scale back its green ambitions to focus more on its core oil and gas business after plunging deep into the red last year.
He must unveil his recovery plan and his rescue plan on Friday.
The sources said the funding package was close to being approved.
Part of the 1.5 billion euros will be used to honor a 500 million euro bond that matures in April, even though the company has cash to cover, one of the sources said.
Saipem’s remaining outstanding bond portfolio of 2 billion euros will not be refinanced but may run to maturity dates, the source said.
A revolving credit facility of 1 billion euros, which would mature at the end of 2023, could be extinguished early and replaced by an identical line with a maturity of three years, said one of the sources.
But the source added that it was still under discussion.
Eni, CDP and Saipem declined to comment.
($1 = 0.9069 euros)
(Reuters- Reporting by Andrea Mandala, Stephen Jewkes, Giuseppe Fonte; edited by Richard Pullin)