Italy's Saipem sets aside $218 million for Algeria fine to compound woes

By Stephen Jewkes

MILAN (Reuters) -Saipem's financial problems deepened on Tuesday when the cash-strapped group said it would set aside 192 million euros ($218 million) to cover a fine imposed by an Algerian court over alleged corruption.

The Italian energy services contractor stunned the market at the end of January saying it would report a 2021 loss of over one-third of the company's equity.

The profit warning sent shares and bonds crashing, forcing the company to open discussions with shareholders and creditor banks over a funding package to revive fortunes.

In a statement on Tuesday, Saipem said it would book the Algeria court fine on its 2021 accounts but would not pay it immediately pending an appeal.

The company, controlled by energy group Eni and state lender CDP, said it was not yet aware of the reasons for the ruling but noted an Italian court had acquitted it in 2020 in proceedings involving the same contract.

The case revolves around the 2008 tender for the award of the GNL3 Arzew contract by state-owned Sonatrach to build a single-train gas liquefaction plant.

"We believe the conviction can expand the (2021) net operating loss... to 2.3-2.4 billion euros," Italian broker Equita said in a research note.

Saipem shares, which have fallen 38% from the start of the year, edged up 0.6% at 1613 GMT.

'MORE COMPLEX'

The ruling by the Algeria court comes as Saipem races against the clock to draw up a rescue plan that could involve a capital increase and a restructuring of debt.

Saipem said on Tuesday that it would submit an updated strategic plan for approval by the board on March 15 and present it to investors in a conference call the following day.

The plan, superseding one presented last October but pulled with the profit warning, had been expected by many on Feb. 24.

"The problems are much more complex than was first thought," a source close to the matter said.

Earlier in February Saipem bowed to pressure and appointed two new managers to represent its top two shareholders and flank company CEO Francesco Caio and CFO Antonio Paccioretti.

Saipem said it would present guidelines for the review of the 2022-25 plan on Feb. 24, along with some financial results.

($1 = 0.8813 euros)

(Reporting by Stephen Jewkes, additional reporting by Cristina Carlevaro; Editing by Keith Weir and Bernadette Baum)