Transocean Ltd. (RIG), the world’s biggest operator of offshore drilling rigs, fell the most in two months in Zurich trading after saying it won’t recommend a dividend payment at its 2012 annual shareholder meeting.
The company, based in Vernier, Switzerland, declined by 5.1 percent in Zurich, the biggest drop since Dec. 14. It also plans to book a charge on a “substantial” portion of the goodwill on its contract drilling services reporting unit. The total goodwill associated with the unit was about $8 billion.
“For a short time Transocean was a relatively high dividend yield play for some investors, which now will disappear,” said Martin Schreiber, an analyst at Zuercher Kantonalbank AG in Zurich. “The amount of the impairment is not known for the time being but if it’s markedly above $1 billion, it’s likely to lead to some additional pressure on the stock.”
Transocean slid 2.35 Swiss francs to 43.57 francs by the close in Zurich, eroding its gain for the year to 20 percent.
Transocean owned a rig that exploded in the Gulf of Mexico in April 2010, killing 11 workers and spewing crude for 87 days in the worst spill in the U.S. The country’s Justice Department sued Transocean, BP Plc, the operator of the Macondo well drilled by the rig, and partners Anadarko Petroleum Corp. and Mitsui & Co.’s MOEX Offshore 2007 LLC seeking fines for pollution, with a trial set for Feb. 27.
Some industry analysts forecast BP and other parties in the litigation may reach a settlement after Mitsui’s unit agreed last week to pay at least $90 million to the U.S. and five states for pollution claims.
“Investors’ reaction to the news is to sell the shares as the market may now speculate on the reason for not paying out a dividend, for example that Transocean either struck a deal with BP or that they are about to receive a fine,” said Anders Bergland, head of equity research at RS Platou Markets AS in Oslo. “In addition, they fear the impairment charge may jeopardize its investment grade rating. We still believe there’s significant value in the company, but the management does not provide the visibility to support those values.”
The company has rallied this year as oil gained on signs of an improving U.S. economy and progress on a bailout for Greece.
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