Transocean LTD (NYSE:RIG) announced that the company will convene an Extraordinary General Meeting of Shareholders (“EGM”). The EGM, which will be open to shareholders of record as of October 12, 2015, will be held at 5:00 p.m., CEST, on October 29, 2015, in Cham, Switzerland. Additional details on the EGM will be provided to shareholders and be made publicly available in a proxy statement that will be filed with the U.S. Securities and Exchange Commission.
The Board of Directors (the “Board”) will propose the following items for approval at the EGM:
- The election of Jeremy D. Thigpen, the company’s President and Chief Executive Officer, as a member of the Board for a term extending until completion of the 2016 Annual General Meeting.
- The cancellation of the third and fourth installments of the dividend approved at the company’s annual general meeting held on May 15, 2015.
- A reduction of the par value of each share of the company to CHF 0.10 from currently CHF 15.
A portion of the aggregate par value reduction amount is proposed to be used to reduce the company’s balance sheet loss as recorded on the company’s standalone statutory balance sheet, and the remainder is proposed to be allocated to the company’s statutory capital reserves.
In light of the deterioration of the offshore drilling market and concerns regarding the timing of the market’s recovery, the company is evaluating its investments in affiliates as recorded on its Swiss standalone statutory balance sheet for impairment on an interim basis. Based on analysis carried out to date, the company expects the carrying amount of these investments to be further impaired. As a result, the company may recognize an aggregate loss associated with these non-cash impairments, expected to be in excess of CHF 2 billion, on its Swiss interim standalone statutory balance sheet as of July 31, 2015. Such increase in the net loss on the Swiss standalone statutory balance sheet would result in the company’s net assets covering less than 50% of its Swiss statutory share capital and capital reserves. In accordance with Swiss law, the Board will propose a par value reduction as a measure to address such capital loss. If approved by shareholders, a portion of the reduction will be allocated to reduce any net loss on the company’s Swiss standalone statutory balance sheet and the remainder will be allocated to the company’s Swiss statutory capital reserves. Other than an accounting realignment between the line items “shares” and “additional paid in capital” reflecting the reduction in par value, it is not expected that the consolidated financial statements of the company and its subsidiaries will be affected. The company is continuing its impairment analysis and will provide further guidance in due course.
- The cancellation of all shares of the company that have been repurchased to date under the company’s share repurchase program approved in 2009, as required under Swiss law. (Original Source)
Shares of Transocean closed today at $12.20, down $0.06, or 0.49%. RIG has a 1-year high of $38.87 and a 1-year low of $12.08. The stock’s 50-day moving average is $13.89 and its 200-day moving average is $16.38.
On the ratings front, Transocean LTD has been the subject of a number of recent research reports. In a report released yesterday, Canaccord analyst Alex Brooks reiterated a Sell rating on RIG, with a price target of $10, which reflects a potential downside of -22.7% from last closing price. Separately, on August 10, Jefferies Co.’s Brad Handler upgraded the stock to Hold .
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Alex Brooks and Brad Handler have a total average return of 34.3% and -9.0% respectively. Brooks has a success rate of 90.9% and is ranked #371 out of 3730 analysts, while Handler has a success rate of 39.9% and is ranked #3653.
Transocean Ltd is an international provider of offshore contract drilling services for oil and gas wells. The Company has two operating segments; contract drilling services and drilling management services.