Transocean Ltd. (NYSE: RIG) yesterday announced a secondary offering of 26 million shares. The sale was completed today at a share price of $40.50, more than a dollar lower than the stock’s closing price yesterday of $41.63. Such a sale normally pushes the share price down, but in Transocean’s case shares are actually up today. The reason for the rise is interesting, to say the least.

The share sale was barely behind the company when Transocean announced that its wholly owned subsidiary, Transocean Inc., would offer new senior notes under a shelf registration the company filed in September 2010. Here’s what the company has to say about the new notes:

Transocean Inc. intends to use a portion of the net proceeds from the offering to fund (after the application of the proceeds of Transocean Ltd.’s previously announced equity offering) the expected repurchase of its 1.50% Series B Convertible Senior Notes due December 2037 that holders of the Series B Convertible Senior Notes may require it to repurchase in December 2011. In addition, Transocean Inc. intends to use a portion of the net proceeds from the offering to refinance all commercial paper notes outstanding under its commercial paper program. Transocean Inc. plans to use the remainder, if any, of such net proceeds for general corporate purposes in its operations, including but not limited to capital expenditures, acquisitions or repayment or refinancing of debt. Pending application of the net proceeds from the sale of the senior notes, Transocean Inc. intends to invest such proceeds in cash or cash equivalents.

The new senior notes will be offered in three tranches: a 5-year, a 10-year, and a 30-year issue. The company has not specified either the price of the notes or the total amount of the offering.

According the company’s SEC filing today, the company’s expects to repurchase $659 million of its outstanding 1.50% Series B Convertible Senior Notes with proceeds from the new notes offering. The total outstanding on the Notes is about $1.7 billion. Note holders may require the company to repurchase the convertible notes by the end of December, and Transocean is building a war chest to do that.

Transocean also claims to have $79 million outstanding in its commercial paper program. The entire amount would be covered in this new note offering. Transocean noted that its total debt, as of September 30, 2011, equalled $11.1 billion, of which about $2 billion is due within one year. The remaining $9.1 billion is long-term debt. That amount does not include $1.8 billion in debt related to the company’s completion of its acquisition of Aker Drilling ASA in October.

Moody’s put Transocean on ratings review for a possible downgrade in mid-November, and the company faces the first of what could be many courtroom appearances in connection with its role in the Macondo well explosion last year in the Gulf of Mexico. S&P and Fitch Ratings have already lowered Transocean’s debt rating to a single notch above junk.

So why is the share price rising today? The answer has to be that today’s successful share offering has quieted concerns about the company’s ability to raise cash and is likely to forestall any further credit rating downgrades.  A strong stock market is also helping, of course.  Transocean’s shares are up nearly 4%, at $43.29, in a 52-week range of $41.28-$85.98.

Paul Ausick

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