Saipem’s capital increase will start on Monday 27 June 2022. How does this recapitalization work? Is it worth attending or not?
The capital increase of Saipem. The operation meets the purpose of allowing the company to reach a level of capitalization deemed appropriate for the purposes of overcoming the tense situation economic, equity and financial manifestation starting from January 2022, in addition to the achievement of the objectives set by the 2022-2025 Strategic Plan. Furthermore, based on the characteristics of the transaction, Borsa Italiana reported that the capital increase is classified as highly dilutive.
But how does the recapitalization work? Let’s go back to the analysis developed for the previous recapitalisations and run a simulation based on the possibilities available to those who were already shareholders at the start of the capital increase. Logically, the choice is between joining the capital increase or not.
First of all, a very important premise: the following writing does not intend to provide any investment advice, but to indicate some operating methods in the context of Saipem’s capital increase.
READ ALSO – Saipem capital increase: characteristics of the transaction
SAIPEM CAPITAL INCREASE: WHAT TO DO IF YOU ARE A SHAREHOLDER
For Saipem shareholders at the start date of the recapitalization, the main choice available is between adhere to the capital increase or not.
Both options require action to be taken. Even if you decide not to participate, in fact, it is better not to sit idle.
TAKE PART IN THE SAIPEM CAPITAL INCREASE AS A SHAREHOLDER
The first day of the capital increase, Monday 27 June 2022, from the official price of Saipem a right will be “extracted” (therefore assigned free of charge to shareholders for each single share held), which represents the option (for the shareholder) to participate in the capital increase under the established conditions (the subscription at a unit price of € 1.013 of 95 new ordinary shares each assigned right). By using this option (you must notify your bank) and then paying the sum to subscribe the new shares, the shareholder participates in the capital increase.
So the share of the individual shareholder in the capital of the institution will not be diluted (the weight of the shareholder’s participation in relation to the total capital will not decrease).
In this regard, in the summary of the prospectus, Saipem indicated that the shareholders who decide not to subscribe the offer for the part of their competence and in the case of full subscription of the capital increase, they would undergo a maximum dilution of their participation in percentage terms on the capital equal to 98.9%.
READ ALSO: Paid capital increases: a numerical example
THE SAIPEM SHAREHOLDER WHO DOES NOT WANT TO ATTEND
Logically, those who do not want to increase their commitment to Saipem can decide not to participate in the capital increase.
In this case, the shareholder can sell the shares currently in circulation before the start of the capital increase (i.e. before the close of Piazza Affari on June 24) or sell the rights that will be assigned to it on the marketas they are negotiated as if they were a normal action. However, unlike stocks, the rights have an expiry date. For Saipem, the last day of trading of the rights is July 5, 2022. In this case, operators recommend selling the rights without waiting for the last trading days of the same, sessions characterized by very high volatility.
INCREASE SAIPEM: PARTICIPATE PARTICIPATE
There are also numerous intermediate options.
That is, you can sell part of the rights and use the sum collected to purchase the new shares, exercising the rights left in the portfolio.
READ ALSO: The capital increases and the option right
TAKE PART IN THE SAIPEM CAPITAL INCREASE AS A NON-SHAREHOLDER
For anyone who is not a Saipem shareholder at the start of the capital increase but who has recently become convinced of the possibility of becoming a shareholder of the company, purchase rights and subscribe the new shares (in the same way the shareholders do) or directly purchase the shares (minus the detachment of the right) on the market.
The arbitrage on the stock, at least in the first days of the capital increase, they work to keep the prices of the two instruments aligned.
However, Saipem indicated that, in consideration of the inseparable nature of the capital increase, in the event that the increase is not fully subscribed, the company will not proceed with the issue and delivery of any of the new shares and consequently the investors who have purchased the option rights during the offer period could realize a loss equal to the investment made to acquire these rights. Furthermore, in order to comply with the legislation on short selling, investors are invited to consider that the new shares will not be credited until the date of the communication regarding the final outcome of the capital increase.
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