Saipem shares plunge after 70% cash call subscription

Saipem said on Monday it had raised around 1.395 billion euros ($1.4 billion) at the closing of a hyper-dilutive capital increase launched last month as part of a plan to try to stabilise its finances and refocus its business after a surprise profit warning in January.

A pool of banks has pledged to mop up any unexercised rights to guarantee the full amount of the capital increase is covered.

The company, controlled by energy group Eni and Italys state lender CDP, will offer unexercised rights on the Italian stock exchange on Tuesday and Wednesday, with the subscription of the relevant shares to be completed by 1200 GMT on Thursday.

Bestinver analyst Marco Opipari said in a report on Tuesday he expected Saipems market price would “converge towards the subscription value”.

Saipem offered its new shares at an issue price of 1.013 euros each, at a ratio of 95 new shares for every one ordinary or savings share held.

By 0755 GMT shares were automatically halted from trading after falling 33.5% to 2.52 euros.

The stock had been trading above the subscription price throughout the offer period due to the structure of the capital increase, which made it impossible for investors to short it.

Between Saipems profit warning in January and an all-time low hit at the end of June at 0.7583 euros, shares in the company lost around 75% of their value. They later bounced back to briefly surpass the 4 euro threshold last Friday. ($1 = 0.9996 euros)