Transocean's Move to Switzerland Pays Off for Note Holders (RIG)

The world’s largest offshore drilling contractor, Transocean (NYSE:RIG) is moving its incorporation location from the Cayman Islands to Switzerland. Pending final approvals, the move will be effective on December 18th.

The move triggers an obligation for Transocean to convert three 30-yearsenior convertible notes issues into cash and shares. The notes wereissued in December 2007 for an aggregate amount of $6.6 billion, mostof which went to pay for the merger with GlobalSantaFe. The bookrunnersfor the notes issues were Goldman Sachs (NYSE:GS) and Lehman Brothers,along with a few other of the usual suspects.

According to the company’s press release, the conversion rate for noteholders is 5.931 shares of Transocean stock for each $1,000 ofprincipal held, about $168.61/share. Transocean’s total obligation foreach $1,000 in principal is around $440.

Transocean’s latest quarterly report shows long-term debt of nearly$13.9 billion and available cash and equivalents of about $1.2 billion.The stock is trading more than 55% below its 52-week high of$163/share. That number is not likely to improve today.

Paul Ausick
November 18, 2008