This is what Fincantieri’s capital increase will look like

All the details on the 400 million euro capital increase decided by the Trieste shipbuilding group aimed at purchasing Leonardo's naval armaments subsidiary (formerly Wass). Facts, numbers and insights

Fincantieri's capital increase will launch on the stock exchange on Monday 24 June.

The Trieste-based shipbuilding group has set the price of the capital increase at 2.62 euros per share, the option rights of which can be exercised from 24 June to 11 July and are negotiable from 24 June to 5 July. The company led by Pierroberto Folgiero made this known yesterday in a press release in which it adds that the subscription price incorporates a discount of 32.2% compared to the Terp of Fincantieri shares based on yesterday's closing.

Consob had authorized the publication of the information prospectus relating to the offer and admission to trading on the Euronext Milan market of the newly issued ordinary shares of Fincantieri resulting from a capital increase under option, for a maximum total amount of 400 million euros , inclusive of surcharge.

All the details.

TERMS AND CONDITIONS OF THE FINCANTIERI CAPITAL INCREASE

Fincantieri's board of directors has set the price at which the new shares will be offered in the capital increase which will start on the stock exchange on Monday at 2.62 euros. The 399.3 million euro operation involves the issue of 152,419,410 new shares to be offered as an option to shareholders in the ratio of 9 shares for every 10 already owned.

The subscription price of the new shares incorporates a discount of 32.2% on the theoretical ex-rights price (TERP) calculated on the basis of yesterday's stock market closing. The issued shares are combined free of charge with the same number of warrants which will give the right to subscribe to new Fincantieri shares at the subscription price of 4.44 euros each, equal to a premium of 14.9% on the Terp. The exercise ratio is 5 new shares for every 34 warrants exercised. For the exercise of the warrants, a maximum of 22,414,615 shares will be issued for an amount of 99.5 million euros.

NON-HYPERDILUITIVE CAPITAL INCREASE

The capital increase under option does not constitute a "hyper-dilutive capital increase" pursuant to Consob communication no. 88305 of 5 October 2016 and by the regulations of the Italian Stock Exchange.

BNP, INTESA SANPAOLO, JEFFERIES, JP MORGAN AND MODIOBANCA GUARANTEE THE CAPITAL INCREASE OF FINCANTIERI

Furthermore, the Trieste company has signed the guarantee contract with the credit institutions (BNP, Intesa Sanpaolo, Jefferies, JpMorgan and Mediobanca) which commits the banks to underwrite any new shares that may be unopted at the end of the offer on the stock exchange for a maximum amount of 113.5 million.

PRESENT AND FUTURE OF SHAREHOLDERS

At the moment, net of the shareholdings held by Cdp Equity (reference shareholder with 71.3%), by Inarcassa (2.2%) and by Bankitalia (1%), the share of institutional investors in the capital of Fincantieri is around 7-8% percent. “A level that the CEO obviously aims to raise by leveraging the growth project,” remarked Il Sole 24 Ore .

HOW MUCH CDP EQUITY PAYES

Cdp Equity, controlling shareholder of Fincantieri, has undertaken to subscribe to the new shares for a total amount of 287 million, corresponding to its share in the capital.

TOTAL EXPENSES

The total costs in consultancy and out-of-pocket expenses that Fincantieri will have to bear for the 400 million euro capital increase that starts on Monday amount to 19 million euros. The figure is reported in the information prospectus of the operation and includes the commissions payable to the credit institutions guaranteeing the capital increase (BNP Paribas, Intesa Sanpaolo, Jefferies, JP Morgan, Mediobanca). The amount of total expenses, we read in the document, corresponds to 4.8% of the proceeds of the offering.

WHAT WILL FINCANTIERI DO WITH RECAPITALIZATION

As already mentioned, the recapitalization will serve to support the purchase of Leonardo's Underwater Armaments & Systems (Uas) business line from Fincantieri.

The operation has a value of 300 million euros, with a variable component of a maximum of 115 million euros upon the occurrence of certain performance objectives for the year 2024, for a total Enterprise Value of a maximum of 415 million euros.

The announcement of the operation arrived on May 9th, via two company press releases, confirming the rumors of recent months according to which the Trieste naval group was negotiating with the former Finmeccanica the acquisition of Wass for an operation that could have required a capital increase .

WASS'S NUMBERS

Fincantieri estimates that the Underwater Armament Systems business unit sold by Leonardo will generate 190 million in revenues in 2024 with a gross margin of around 22% and 240 million in revenues in 2025 with a margin of around 21%. This is what emerges from the prospectus of the capital increase functional to the acquisition of Leonardo's sonar and torpedo activities. In 2027 the forecast is for revenues and income of around 280 million with a stable margin of 21%.

The group "does not have a definitive and precise estimate of the amount of synergies expected from the Uas branch", we read in the document, but expects that "they may begin to appear in the final part of the time span of the industrial plan (stand alone) and , significantly, beyond 2027.” In 2023 the revenues of the former Wass are indicated at 170 million.

Of the 166 million euros in revenues achieved in 2023 from the former Whitehead Sistemi Subacquei activities that Fincantieri is preparing to acquire, 58% derives from torpedoes, while countermeasures account for 15%, sonars for 11% and services for 16%. The main customers are Thyssenkrupp Marine Systems, Qatar Armed Forces, the Portuguese Ministry of Defense and the French Naval Group.

HOW MUCH IS THE TORPEDO MARKET WORTH…

The torpedo market is estimated to be worth around 10 billion globally in the period 2024-28 – according to the estimate made by Fincantieri thanks to the contribution of external advisors and sector experts – and is almost equally divided between heavy and light torpedoes, but the driver of growth will be represented by light ones with a rate of 18% per year. From the players' point of view, the torpedo market is a fragmented market at a global level and more concentrated at a regional level: in Europe it sees the prevalence of shipbuilders while in the USA the two defense giants Raytheon and Lockheed Martin are the leaders.

… AND THAT OF THE SONARIOS

The sonar market is estimated to be worth around 16 billion euros in the five-year period 2024-28 with a progressive prevalence of active sonars and "dual-mode" sonars: Lockheed Martin and Thales together hold approximately 50% of the market. As regards countermeasures (torpedo deterrents, anti-torpedo interceptors) the 2024-28 market is estimated at 2 billion euros and, in terms of operators, it is rather fragmented with the only significant player represented by Ultra (group British Cobham) which has a 20% market share.

THE GUIDANCE FOR REMAZEL

Finally, the statement of the capital increase also reports the guidance regarding the other recent company acquired by Fincantieri, Remazel Engineering: the estimate is revenues of 110 million this year (100 million in 2023) and 120 million l next year with an EBITDA impact of 15% in 2024 and 13% in 2025. In 2027 Remazel, active in diving and marine energy, should reach 140 million in revenues with a margin of 13%.

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This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/ecco-come-sara-laumento-di-capitale-di-fincantieri/ on Sun, 23 Jun 2024 09:52:55 +0000.