Technip Energies fell 15% on the stock market, driven by the 40% plunge of its Italian competitor Saipem. The engineer in difficulty, specialist in oil and gas drilling, wanted to strengthen his financial solidity by raising funds. He was aiming to raise fresh money of 2 billion euros via an extremely dilutive capital increase. However, the deal, announced in March and launched last month, was only 70% subscribed.
The verdict fell last night. Because of the reluctance of investors, who doubt the ability of the group to recover as fears of recession intensify, Saipem was finally able to raise just under 1.4 billion euros. Approximately 1.377 billion new shares were subscribed, at a unit price of 1.013, slightly below the historic low reached on June 24 (1.174 euro), at the rate of 95 new shares for 1 ordinary share.
Unexercised rights are sold, from today, on Euronext Milan. The final result of the capital increase will be known on Friday.
Saipem is controlled by the oil company Eni and the Italian Caisse des dépôts. The two main shareholders, who together own 44% of the capital, have subscribed to the operation in proportion to their respective stakes. The banking syndicate in charge of the operation had undertaken to subscribe the balance of the capital increase if it was not fully covered. A trader in Milan, quoted by Reuters, said the amount of unexercised subscription rights was probably higher than expected, which implies a risk that banks will sell as soon as possible on the market a part of their titles.
In a context of rising interest rates, a company’s financial solidity is a decisive investment criterion. The bankruptcy in the United States of the oil services company ION Geophysical is making investors hyper-vigilant.
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In June, Saipem had indicated that in the absence of a capital increase, its financial resources would not allow it to continue its activities beyond the first quarter of 2023 despite the surge in oil prices since the start of the year which should encourage majors to resume investments to increase their production. “Some investment decisions on the part of the principals take time to materialize, we put this down to the volatility of commodity prices as well as fears about future global demand given a macroeconomic context less buoyant”explained recently within the private bank Oddo BHF.