(Recasts with Saipem statement)
By Stephen Jewkes
MILAN Jan 25 Saipem signed a
memorandum of understanding on Monday to cooperate on major oil
and gas projects in Iran, as the Italian oil contractor's giant
3.5 billion-euro ($3.79 billion) rights issue began.
The deal with Iran comes at an opportune time for the
company, which has been hit hard by a prolonged oil price slump
that has prompted oil majors to cut investment and seek lower
prices from suppliers.
Saipem, controlled by Eni and Italian state lender
fund FSI, said the MoU had been signed with the Parsian Oil &
Gas Development Co and involved the revamping and upgrading of
the Pars Shiraz and Tabriz refineries.
No financial details were provided.
Earlier on Monday, a source close to the matter said Saipem
would announce later in the day a deal worth between $4 billion
and $5 billion to build 2,000 km (1,240 miles) of pipeline in
"This would represent around 18 months' revenue for Saipem's
onshore business and would be very welcome," broker Canaccord
Genuity said, commenting on reports Saipem could win contracts
worth 5 billion euros.
The agreement, signed on the first day of the official visit
to Rome of Iranian President Hassan Rouhani, came
as rights in the company's cash call started trading. Earlier
this month, international sanctions were lifted on Iran
following implementation of its nuclear agreement with world
The 22-1 rights issue, priced at a 37 percent discount, will
lead to the issue of 9.6 billion new shares, lifting the total
share count to just over 10.1 billion. All the new shares are
underwritten by Eni and FSI as well as the consortium of banks
that managed the rights issue.
"The cash call will be extremely dilutive on the stock," an
analyst said, adding some shareholders were selling their rights
while at the same time buying shares to limit their dilution.
Trading in Saipem shares, halted temporarily after a 6.7
percent jump, ended the session up 18 percent.
The oil contractor approved the rights issue as part of a
turnaround plan that also included 8,800 job cuts.
In its rights issue prospectus, Saipem said it had trimmed
its sales guidance for last year and might have to review its
recent four-year business plan targets if oil prices remained at
current low levels.
($1 = 0.9236 euros)
(Reporting by Stephen Jewkes; Editing by David Goodman and