Saipem Said Near 3.5 Billion Euro Share Sale in Crude Slump

  • Investors may seek a 35 percent to 40 percent discount
  • The process to raise funds may start as soon as next week

Saipem SpA is nearing a plan to sell new shares worth as much as 3.5 billion euros ($3.8 billion) as the Italian oil-services company seeks to shore up its balance sheet amid a slump in crude prices, according to people familiar with the matter. The shares dropped.

The company is preparing the stock sale with its advisers and it could be announced as early as next week, the people said, asking not to be identified as the information is private. Investors may ask for a 35 percent to 40 percent discount to the market price, the people said. No final decision has been made and those numbers could change based on market conditions, they said.

A Saipem representative declined to comment on the timing or pricing of the share sale.

Saipem fell 5.4 percent to 6.64 euros at 1:20 p.m. before trading was halted in Milan. The stock has declined 10 percent in the last 12 months, giving it a market capitalization of 2.93 billion euros.

Discounted Shares

Saipem is pushing ahead with a plan to offer as much as 3.5 billion euros in new shares by the first quarter of 2016, which it first flagged in October.

Oil-service companies in Europe are being forced to sell new shares at significant discounts as a plunge in oil prices curbs demand for its services from exploration companies. Smaller rival CGG SA said earlier in the week that it will sell 350 million euros of new shares at a 72 percent discount to finance its turnaround plan.

Crude prices have tumbled to near 12-year lows as slowing growth in China, the world’s biggest energy user, compounds a global supply glut. Oil producers are responding by delaying projects and squeezing lower prices out of the companies that operate their drilling rigs, conduct their seismic surveys and build their pipelines. That’s left many such providers scraping for funds to ride out the slump.

Italian energy giant Eni SpA is the company’s biggest shareholder, according to data compiled by Bloomberg. Eni agreed to sell a 12.5 percent stake in Saipem to FSI in October.

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