Transocean Prices Convertible Senior Notes Offering
Transocean priced a public offering of $2 billion of 1.625% Series A Convertible Senior Notes due 2037, $2 billion of 1.50% Series B Convertible Senior Notes due 2037 and $2 billion of 1.50% Series C Convertible Senior Notes due 2037 (together, the "Convertible Notes"). Transocean has granted an option to the underwriters to purchase up to an additional $200 million of each of the Series A, Series B and Series C Convertible Notes. The Convertible Notes offering is expected to result in net proceeds to Transocean of $5.94 billion. The offering is expected to close on December 11, 2007, subject to the satisfaction of closing conditions.
The Convertible Notes will be convertible in certain circumstances into cash and a number of Transocean ordinary shares determined as described in the prospectus supplement related to the offering. The initial conversion rate of the Convertible Notes is 5.9310, equivalent to a conversion price per ordinary share of approximately $168.61. The conversion price represents a conversion premium of approximately 32.5% to the closing price of Transocean ordinary shares on the New York Stock Exchange on December 5, 2007, of $127.25. In addition, if certain fundamental changes occur on or before December 20, 2010, with respect to Series A Convertible Notes, December 20, 2011, with respect to Series B Convertible Notes or December 20, 2012, with respect to Series C Convertible Notes, Transocean will in some cases increase the conversion rate for a holder electing to convert notes in connection with such fundamental change.
Upon conversion, Transocean is obligated to settle the Convertible Notes by delivering cash up to the aggregate principal amount of the Convertible Notes to be converted and ordinary shares in respect of the remainder, if any, of Transocean's conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted.
Goldman, Sachs & Co. and Lehman Brothers Inc. are joint bookrunning managers for the Convertible Notes offering, Citi is a joint bookrunning manager for the offering of Series A and C Convertible Notes and Credit Suisse is a joint bookrunning manager for the offering of Series B Convertible Notes.
Transocean will have the right to redeem the Convertible Notes for cash on or after December 20, 2010, in the case of the Series A Convertible Notes, December 20, 2011, in the case of the Series B Convertible Notes, and December 20, 2012, in the case of the Series C Convertible Notes, at a redemption price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest, if any, up to, but excluding, the redemption date. A holder of the Series A Convertible Notes and the Series B Convertible Notes will have the right to require Transocean to repurchase their notes on December 15, 2010 and December 15, 2011, respectively. In addition, holders of each series of Convertible Notes will have the right to require Transocean to repurchase their notes on December 14, 2012, December 15, 2017, December 15, 2022, December 15, 2027 and December 15, 2032 or upon a fundamental change, in each case at a repurchase price in cash equal to 100% of the principal amount of the notes, plus accrued and unpaid interest, if any, up to, but excluding, the repurchase date.
Transocean intends to use the $5.94 billion of net proceeds from its proposed Convertible Notes offering (or up to $6.53 billion if the underwriters exercise their option to purchase additional Convertible Notes in full), together with $2.47 billion of net proceeds from the proposed Senior Notes offering and $1.5 billion of borrowings under its $1.5 billion 364-day revolving credit facility, to repay a portion of the outstanding borrowings under Transocean's $15.0 billion bridge loan facility that were incurred to fund cash payments to shareholders in connection with Transocean's recently completed reclassification of its ordinary shares and merger with GlobalSantaFe Corporation.
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