what to do and how to do it

Saipem’s capital increase will start on Monday 27 June 2022. How does this recapitalization work? Is it worth participating or not?

The capital increase of Saipem. The purpose of the operation is to enable the company to reach a capitalization that is deemed adequate for the purposes overcoming the tense situation economic, just and financial manifestation from January 2022 in addition to the Achievement of the objectives of the Strategic Plan 2022-2025. In addition, Borsa Italiana has reported this due to the characteristics of the transaction The capital increase is classified as highly dilutive.

But how does the recapitalization work? Let’s return to the analysis developed for the previous recapitalizations and run a simulation based on the opportunities available to those who were already shareholders at the start of the capital increase. Logically, there is a choice between participating in the capital increase or not.

First of all, a very important premise: The following letter is not intended to offer investment advice, but to show some procedures in connection with Saipem’s capital increase.

ALSO READ – Saipem capital increase: characteristics of the transaction

SAIPEM CAPITAL INCREASE: WHAT TO DO IF YOU ARE A SHAREHOLDER

The primary choice for Saipem shareholders on the recapitalization start date is between stick to the capital increase or not.

Both options require action. Even if you decide not to participate, it is indeed better not to remain idle.

PARTICIPATE AS A SHAREHOLDER IN SAIPEM’S CAPITAL INCREASE

The first day of the capital increase, Monday June 27, 2022 from the official price of Saipem a right is “extracted” (therefore allocated free of charge to the shareholders for each no-par value share held), which represents the opportunity (for the shareholder) to participate in the capital increase under the specified conditions (purchase of 95 new common shares at a price of €1.013 per allocated right). By using this option (obligation to report to your bank) and then paying in the subscription amount for the new shares, the shareholder participates in the capital increase.

So the individual shareholder’s share of the institution’s capital is not diluted (the weight of the shareholder’s participation in relation to the total capital does not decrease).

In this regard, Saipem indicated in the summary of the prospectus that shareholders who decide not to subscribe to the offer for part of their powers and in the event of a full subscription to the capital increase, they would experience a maximum percentage dilution of their equity interest partially 98.9%.

ALSO READ: Paid capital increases: a numerical example

THE SAIPEM SHAREHOLDER WHO DOESN’T WANT TO PARTICIPATE

Logically, those who don’t want to can increase their commitment to Saipem decide not to participate in the capital increase.

In this case, the shareholder can redeem the shares currently outstanding before the start of the capital increase (ie before the closure of Piazza Affari on June 24) or sell the rights transferred to him on the markethow They are resolved as if they were a normal action. Unlike stocks The rights have an expiration date. For Saipem, the last trading day of the rights is July 5, 2022. In this case, the 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.

This means you can sell part of the rights and use the collected sum to buy the new shares and exercise the rights remaining in the portfolio.

ALSO READ: The capital increases and the option right

PARTICIPATE IN THE SAIPEM CAPITAL INCREASE AS A NON-SHAREHOLDER

Anyone who is not a Saipem shareholder at the beginning of the capital increase, but has only recently convinced himself of the possibility of becoming a shareholder of the company, Purchase rights and subscribe to the new shares (as the shareholders do) or buy the shares directly on the market (less the redemption of the subscription right)..

That arbitrage on the stock, at least in the first few days of the capital increase, they are working to keep the prices of the two instruments the same.

Saipem pointed out, however, that given 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 the option rights during the Purchased by the offer period could realize a loss equal to the investment made to acquire those rights. In addition, in order to comply with short selling laws, investors are asked to take into account that the new shares will not be credited until the date of notification of the final result of the capital increase.


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