Transocean Ltd. RIG today announced that
certain Funds affiliated with Carl Icahn submitted to the company for vote at
its 2013 Annual General Meeting of Shareholders ("AGM") a dividend proposal of
$4.00 per share. Additionally, the Funds provided a notice of nomination of
three director candidates for election to Transocean's Board of Directors at
its 2013 AGM and a proposal to repeal the company's staggered board. The
Transocean Board of Directors will evaluate the proposals in due course.
In response to Mr. Icahn's proposals, Transocean issued the following
statement:
In the interest of all of its stakeholders, and in the context of a cyclical
and capital-intensive industry, the Board is focused on driving long-term
value through the execution of the company's disciplined capital allocation
strategy. This strategy includes maintaining a strong, flexible balance sheet
and an investment grade rating on its debt; profitable investment in the
business through value-enhancing opportunities; and the distribution of excess
cash to shareholders.
The Board is confident that its proposed $2.24 per share dividend, or
approximately $800 million in the aggregate, will maximize long-term value
creation and, importantly, establishes a basis that is sustainable and
supports future increases as business conditions warrant. The proposed
dividend resulted from the careful consideration of numerous factors relevant
to the company's business, including operating in a cyclical and
capital-intensive industry; the remaining uncertainties related to the Macondo
well incident; the Frade field incident in Brazil; and the ongoing tax
litigation in Norway. The Board believes that, in the context of the
uncertainties the company currently faces, a larger dividend would be overly
aggressive and detrimental to the company's long-term performance.
Additionally, as part of its prudent, balanced capital allocation strategy, to
facilitate continued progress towards achieving its articulated gross debt
target of $7 billion to $9 billion, the company intends to accelerate
repayment of its debt with the objective of retiring approximately $1 billion
of debt in excess of existing repayment obligations by the end of 2014.
The company is confident that its Board of Directors comprises professionals
with the essential financial, operational, managerial, and corporate
governance expertise necessary to continue to successfully oversee the
execution of the company's strategy. Transocean's Board comprises 13
highly-qualified directors with diverse perspectives on the industry, most of
whom are independent, and all are proven business leaders with a broad and
deep range of leadership experience in, variously, oilfield and offshore
drilling services, finance, manufacturing, law, health, safety and
environment, or other areas crucial to the company's business.
Transocean's approach to corporate governance is to regularly infuse fresh
perspective into an experienced and knowledgeable Board. In this regard, six
of the 12 independent directors have been added to the Board in the last two
years. Furthermore, the company believes that the addition of Frederico F.
Curado will benefit the Board's decision-making process as a result of his
significant senior management experience at a global aerospace corporation,
including his experience with Brazilian business and governmental sectors - an
important region of operations for the company.
With the guidance of the Board, the company has made meaningful progress in
improving its operational performance and executing its objective of
rationalizing its fleet and increasing its exposure to high specification
drilling assets. This includes divesting 38 shallow water drilling rigs in
the fourth quarter of 2012 and completing numerous single-asset sales of
non-core floaters and jackups over the past several years. Additionally, in
late 2012, the company announced it would build four industry-leading,
state-of-the-art, high specification, ultra-deepwater drillships for Shell.
These fully-contracted assets represent 40-rig years of work and an
unprecedented $7.6 billion of long-dated backlog for the company and, together
with the three newbuild high-specification jackups to be delivered in 2013,
support the company's objective to deliver profitable growth and enhance its
global leadership position in high-specification floaters and jackups.
Management and the Board continually assess both the company's strategy and
additional ways of creating value for shareholders. This is evidenced by the
proposed $2.24 per share dividend, the accelerated debt repayment plan and the
announcement that the company will continue its evaluation of alternative
corporate and financing structures. However, the Board does not intend to
take steps that will threaten the company's long-term performance, operating
flexibility and investment grade credit rating. The Board looks forward to
continuing a strategy based on maintaining a strong, flexible balance sheet;
profitable investment in the business through value-enhancing opportunities;
and sustainable return of capital with the goal of future increases should
business conditions warrant.
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