Transocean Ltd : Transocean Ltd. Announces Distribution of Definitive Proxy
Materials and 2012 Annual Report, Including Board Letter to Shareholders
ZUG, SWITZERLAND-Transocean Ltd. (NYSE: RIG) (SIX: RIGN) today announced that
it has commenced the mailing of proxy materials, including a WHITE proxy card
and a letter from the Board of Directors, to the company's shareholders of
record in advance of the company's 2013 Annual General Meeting ("AGM"), which
will be held at 5 p.m. CEST, on May 17, 2013, in Zug, Switzerland. The Proxy
Statement and Annual Report are also available through the company's website
* The Transocean Board of Directors unanimously recommends that the
company's shareholders vote "FOR" a U.S. dollar-denominated dividend of
$2.24 per share, or approximately $800 million in the aggregate (based
upon the number of currently outstanding shares), out of additional
* TheTransocean Board of Directors unanimously recommends that
shareholders vote "FOR" the company's five experienced and highly
qualified director nominees:Federico F. Curado, Thomas W. Cason, Steven
L. Newman, Robert M. Sprague and J. Michael Talbert.
* The Transocean Board of Directors unanimously recommends that
shareholders vote "FOR" the granting of Board authority to issue shares
out of the company's authorized share capital. This authority was
originally granted at the May 2011 AGM and will expire on May 13, 2013.
Shareholders are encouraged to support the Board's recommendations by
voting promptly using the company's WHITE proxy card.
The letter from the Board of Directors, which follows, discusses
Transocean's highly qualified slate of director nominees and reiterates the
reasons the proposed $2.24 per share dividend will maximize long-term
shareholder value. Furthermore, the letter addresses the importance of having
the flexibility to pursue value-enhancing opportunities by granting the Board
the authority to issue additional shares out of the company's authorized share
capital. The Board currently has no plans to exercise this authority.
April 4, 2013
Dear Fellow Transocean Shareholders:
Maximizing the value of your investment in Transocean has always been
and remains the central priority of Transocean's Board of Directors and its
management team. Despite unprecedented challenges in the three years since
the April 2010 Macondo incident, Transocean has made significant and tangible
progress towards its strategic and operational objectives, focused on Board
renewal through the addition of six new independent Board members in the last
two years, and worked tirelessly to generate value for our shareholders.
Additionally, through the partial settlement with the U.S. Department of
Justice, we significantly reduced Macondo-related litigation uncertainty.
Transocean is uniquely positioned to build on these recent successes to
deliver the value that you, our shareholders, expect and deserve.
Transoceanwill hold its Annual General Meeting (AGM) on May 17, 2013,
and we encourage you to approve our $2.24 per share dividend proposal, elect
our Director nominees and re-authorize the Board to issue shares out of the
company's authorized share capital by voting today using the enclosed WHITE
proxy card or by voting on the Internet by following the instructions on the
company's WHITE proxy card.
While there are a number of important items on the agenda at the AGM, we ask
you to consider the Board's recommendations on three proposals in particular:
the dividend, the election of Directors, and the re-adoption of Board
authority to issue shares out of authorized share capital.
VOTE IN FAVOR OF OUR PROPOSED DIVIDEND OF $2.24 PER SHARE
The Board is confident that its proposed $2.24 per share dividend, or
approximately $800 million in the aggregate, is consistent with maximizing
long-term value creation for shareholders and establishes a baseline for a
sustainable return of capital, with the goal of future increases as the
company's unique uncertainties diminish. This view is supported by many
Transocean shareholders and members of the equity research community. The
proposed dividend represents one of the industry's highest implied payout
ratios and dividend yields.
With the Board's guidance, in January we achieved a partial settlement with
the United States Department of Justice, representing a major step forward in
the highly complex Macondo litigation. We are currently in the early stages
of the trial in New Orleans where we will defend ourselves against the
remaining claims. Additionally, we continue to pursue resolution of
outstanding litigation related to the Frade field incident in Brazil and tax
claims in Norway. In each of these cases, we have received favorable court
decisions and believe we have a strong position and defenses. However, the
outcome of the ongoing litigation may not be known for some time. In the
context of a cyclical and capital-intensive industry, the unique uncertainties
associated with the remaining litigation faced by the company dictate that
Transocean must maintain a prudent level of financial flexibility. In this
regard, the Board firmly believes that, at this time, distributing additional
capital to shareholders beyond the proposed $2.24 per share dividend would be
detrimental to long-term shareholder value. In the future, increasing the
annual return of capital may be appropriate once these unique uncertainties
It is also important to note that deterioration in the strength of
Transocean's balance sheet is likely to result in the loss of the investment
grade rating on the company's debt. We believe that this deterioration would
occur with a dividend distribution significantly higher than that proposed by
the Board and would have a real, and profoundly adverse, impact on the
company's ability to create long-term shareholder value. Among other things,
the loss of an investment grade rating would severely limit our access to
reliable sources of capital and increase our cost of debt financing for an
extended period of time. For this reason, the proposed distribution is made
in conjunction with an accelerated retirement of approximately $1 billion of
debt to facilitate continued progress towards achieving a gross debt target of
$7 billion to $9 billion.
The Board believes that this prudent, balanced approach to capital allocation
will maximize long-term value creation by providing an immediate and direct
return to shareholders; enhancing the resilience of the company's balance
sheet; and enabling us to continue to execute a disciplined strategy of making
high-return investments in our offshore drilling fleet to ensure the long-term
competitiveness of the business. Indeed, the value-enhancing addition of new,
state-of-the-art drilling rigs represents a primary source of growth and
future operating income, without which the company's long-term viability would
In sum, Transocean's Board is focused on a responsible, balanced
capital allocation strategy and does not intend to take steps that will
threaten the company's long-term performance, operating flexibility and
investment grade credit rating.
VOTE IN FAVOR OF TRANSOCEAN'S DIRECTOR NOMINEES
The offshore drilling industry is dynamic and continually
presents challenges and opportunities. Reflecting the ever-changing nature of
our business and the unique circumstances in which the company operates, we
spend considerable time evaluating the composition of the Board to ensure we
have a panel of Directors with the experience, skills and capabilities
necessary to represent the best interest of our shareholders; i.e., to create
value. In this regard, Transocean's approach to corporate governance is to
regularly infuse fresh perspectives into an already extraordinarily
experienced and knowledgeable Board. Indeed, six of the company's 12
independent directors have been added to the Board within the last two years.
Transocean's Board of Directors is comprised of professionals with the
expertise necessary to continue to guide the execution of the company's
successful operating and capital allocation strategies.
Transocean's slate of five nominees has deep, relevant
experience and a history of achievement. Furthermore, the nominees represent
decades of experience in the oil and gas industry, including considerable
expertise in the offshore drilling industry. As industry leaders in their
respective fields, our nominees have a record of consistently generating value
for our shareholders and have worked closely with management to develop and
implement the strategic objectives against which the company continues to
successfully execute. Our five nominees contribute complementary and
essential capabilities to the governance process and, in concert with the
balance of the Board, will continue to represent the best interest of all
The Board of Directors unanimously recommends that the company's
shareholders approve the following slate of nominees:
*Frederico F. Curado. Mr. Curado, who is standing for election for the
first time, has served as President and Chief Executive Officer of
Embraer S.A. (NYSE: ERJ), a global aerospace company based in Brazil,
since April of 2008. Given the significance of Brazil as an important
operating region for the company, the Board of Directors believes Mr.
Curado's significant senior management experience operating an
international corporation, including his experience with Brazilian
business and governmental sectors, will benefit the Board's
*Thomas W. Cason. Mr. Cason is a former Chairman and current member of the
Audit Committee. He is an accountant with extensive professional
experience in the finance area of the oilfield services industry,
including offshore drillers, and held senior executive positions with an
oilfield services company. Mr. Cason's education, professional experience
and institutional knowledge are distinct assets to the Board's decision
*Steven L. Newman. Mr. Newman is President and Chief Executive Officer and
a member of the Board of Directors of the company. He has held several
senior management roles with the company including Executive Vice
President and Chief Operating Officer. The Chief Executive Officer
provides a link between the Board and senior management and the Board
believes that this perspective on the industry and competitive matters,
among others, is important in making strategic decisions for the company.
*Robert M. Sprague. Mr. Sprague is the Chair of the Health, Safety and
Environment Committee of the Board. Most of Mr. Sprague's professional
career was spent in the oil and gas industry working outside the United
States with one of the company's key customers. In addition to having an
understanding of the technical nature of the company's operations, as well
as an international perspective, his experience as a customer enables him
to contribute relevant insights to Board deliberations.
*J. Michael Talbert. Mr. Talbert is Chairman of the Board of Directors.
He has extensive senior executive experience in the energy sector
including serving as president of exploration and production and pipeline
companies. Mr. Talbert is also a former Chief Executive Officer of the
company. His comprehensive understanding of the company's business and
culture, and his knowledge from the perspective of a customer, are helpful
in evaluating the future direction of the company.
VOTE IN FAVOR OF THE READOPTION OF AUTHORIZED SHARE CAPITAL
The Board of Directors has proposed that its authority to issue shares out of
the company's authorized share capital, which will expire on May 13, 2013, be
renewed for an additional two-year period, expiring on May 17, 2015. This
authority was originally granted to the Board at the May 2011 Annual General
Meeting. Under the proposal, the Board of Directors' authority to issue new
shares in one or several steps will be limited to a maximum of 19.99% of the
currently existing stated share capital of the company. While the Board
currently has no plans to issue share capital under this authorization,
extending this authority provides the company with additional flexibility to
pursue value-enhancing opportunities in accordance with its disciplined
capital allocation strategy.
UNLOCKING SHAREHOLDER VALUE
Despite unprecedented challenges in the three years since the April
2010 Macondo incident, Transocean has made significant and tangible progress
towards its strategic and operational objectives and the Board and management
have worked tirelessly to generate value for shareholders. We have been
successful. In the three- and five-year periods leading up to the Macondo
incident and in the period since the partial settlement with the Department of
Justice announced in January 2013, Transocean's total shareholder returns have
exceeded those generated by a representative composite of offshore driller
peers, which includes Seadrill, Diamond, Ensco, Noble, Pacific Drilling,
Rowan, Atwood and Hercules.
We intend to continue to deliver. The Board and management are
committed to generating long-term value for our shareholders through continued
improvement in the company's operations and the execution of a well-defined
and balanced capital allocation strategy. This includes maintaining a strong,
flexible balance sheet, characterized by an investment grade rating on our
debt; disciplined high-return investment in the business; and a sustainable
return of capital to our shareholders with the goal of future increases in
distributions as business conditions warrant. The Transocean Board firmly
believes that this is the right strategy to ensure that all shareholders
realize the value that they expect and deserve.
On behalf of Transocean's Board of Directors and management team, we
thank you for your continued support.
J. Michael Talbert Steven L. Newman
Chairman President and Chief Executive Officer
YOUR VOTE IS IMPORTANT!
Please vote TODAY.
Remember, if you hold your shares through a bank or broker custodian, your
custodian cannot vote your shares on certain items without your specific
instructions. Simply follow the easy instructions on the enclosed WHITE proxy
card or WHITE voting instruction form to make sure your shares are counted.
If you have any questions, or need assistance in voting
your shares, please call our proxy solicitor,
INNISFREE M&A INCORPORATED
1-877-456-3507 (toll-free from the US and Canada)
+1 412-232-3651 (from other countries)
Shareholders in the EU may also call Lake Isle M&A Incorporated, Innisfree's
UK subsidiary, free-phone at 00 800 7710 9970, or direct at +44 20 7710 9960.
Statements included in this news release including, but not limited
to, those regarding the proposed dividend, the company's capital allocation
strategy, value-creating objectives and sustainability of potential future
distributions, are forward-looking statements that involve certain assumptions
and uncertainties. These statements are based on currently available
competitive, financial, and economic data along with our current operating
plans and involve risks and uncertainties including, but not limited to,
shareholder approval, market conditions, Transocean's results of operations,
the effect and results of litigation, assessments and contingencies, and other
factors detailed in "Risk Factors" in the company's most recently filed Annual
Report on Form 10-K, and elsewhere in Transocean's filings with the Securities
and Exchange Commission. Should one or more of these risks or uncertainties
materialize (or the other consequences of such a development worsen), or
should underlying assumptions prove incorrect, actual outcomes may vary
materially from those expressed or implied by such forward-looking statements.
Transocean disclaims any intention or obligation to update publicly or revise
such statements, whether as a result of new information, future events or
Transocean is a leading international provider of offshore contract drilling
services for oil and gas wells. The company specializes in technically
demanding sectors of the global offshore drilling business with a particular
focus on deepwater and harsh environment drilling services, and believes that
it operates one of the most versatile offshore drilling fleets in the world.
Transocean owns or has partial ownership interests in, and operates a fleet
of, 83 mobile offshore drilling units consisting of 48 High-Specification
Floaters (Ultra-Deepwater, Deepwater and Harsh-Environment drilling rigs), 25
Midwater Floaters and 10 High-Specification Jackups. In addition, we have six
Ultra-Deepwater Drillships and two High-Specification Jackups under
For more information about Transocean, please visit the website
This announcement is distributed by Thomson Reuters on behalf of Thomson
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other
applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of
information contained therein.
Source: Transocean Ltd via Thomson Reuters ONE
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