Bonds of Transocean Ltd. rose after shareholders rejected a dividend proposal brought by billionaire investor Carl Icahn, instead approving a smaller payout from the world’s largest offshore oil rig contractor.
Transocean’s $1 billion of 6.8 percent bonds due March 2038 jumped 2.1 cents to 119.91 cents on the dollar to yield 5.34 percent, or 219.8 basis points more than Treasuries, as of 12:43 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt traded as low as 110.59 cents in March to yield 5.98 percent.
Shareholders approved the company’s proposed $2.24-a-share dividend, rejecting Icahn’s proposed annual payout of $4. Transocean Chief Executive Officer Steve Newman said on a May 9 earnings call that Icahn’s proposal “is shortsighted, irresponsible and ignores the uncertainties the company currently faces.”
Icahn, the largest shareholder that reports its holdings in Transocean with a 5.6 percent stake, began pushing for the dividend and potential board changes in January. Shareholders voted in favor of one of his three board nominees.