Eni makes progress in loosening ties with Snam
Bond Market Debut for New Eni CFO Mondazzi
Eni
Eni oil field in Tunisia: The Italian energy giant's CFO Massimo Mondazzi is enjoying record-low funding costs.
The debut transaction for Massimo Mondazzi, new CFO of Eni, is certainly a good one. The Italian oil producer announced the issuance of a senior unsecured €1.25 billion bond that is exchangeable for shares in its subsidiary Snam, Italy’s biggest gas grid operator. Investors can exchange the stock option into Snam shares after the share price reaches a premium of 20-25% against yesterday’s reference price. The coupon is expected to be fixed between 0.125 and 0.625%.
According to company statements, Eni intends to use the proceeds for general corporate purposes. Barclays, Deutsche Bank, Mediobanca and Morgan Stanley acted as joint bookrunners. “The move is consistent with Eni's strategy of freeing up resources to invest in E&P assets,” equity analyst Enrico Coco of Kepler Capital Markets said.
Pacioretti seeks full independence
Eni
CFO Massimo Mondazzi had a successful bond market debut.
The bond issuance should have been an easy task for Mondazzi, who took over as CFO of Eni in December. His appointment came after former CFO Alessandro Bernini resigned in connection with corruption charges surrounding Eni’s construction subsidiary Saipem, where Bernini served as CFO until August 2008. With a turnover of more than €100 billion, Eni is a global blue chip company with a credit rating of “A” that enjoys high recognition in the global bond market. Snam shares have also performed robustly even despite turbulence on the stock market during Silvio Berlusconi’s last days as prime minister of Italy and growing doubts over Italian government bonds.
Together with the CFO of his subsidiary, Mondazzi will try to further loosen the ties between Eni and Snam, analysts predict. Eni still holds 30% of Snam stock, even after the oil giant sold another 30% to Italy’s sovereign wealth fund CDP last year. The convertible bond issued today could bring that down to roughly 20%. Paccioretti’s plan is to make Snam independent from Eni. Last year Snam raised bonds worth €2.5 billion in September and €2 billion in July and, in addition, Paccioretti managed to arrange new secured credit lines worth €9 billion. These funds allowed Snam to buy out more than €10 billion of debt formerly owned by its parent company.
michael.hedtstueck[at]cfo-insight.com
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