RIG and Icahn Reach Agreement on Dividend; also news for RIG MLP
Transocean said it reached an agreement with Carl Icahn that would see the offshore driller paying out a dividend and reducing the number of board seats, in a move that resolves a months-long proxy battle.
As per the agreement, Transocean would pay a $3 dividend, while reducing the maximum number of directors to eleven from fourteen. Icahn had previously pressed for a $4 per share dividend.
Icahn, after disclosing his 5.6 percent Transocean stake in January, has gone after the world's largest drilling contractor over "ill-advised" mergers and "unsuccessful" development strategies.
The activist investor has been campaigning for a higher payout and calling for major changes to the Switzerland-based company's board.
Transocean on Monday said it would implement a Master Limited Partnership-type yield vehicle ("MLP") to provide additional financial flexibility.
The initial public offering of the MLP is expected to be completed around the middle of 2014 with a minority interest sold at that stage, the company said in a statement.
As per the agreement, Transocean will target an improvement in operating margins of about $800 million by the end of 2015. The company earlier promised to cut $300 million of costs by 2014.
Even if RIG hits $60 a share, the new $3 dividend will be a 5% dividend. At the current pps of $54 it's a 5.5% dividend. Hmmmmmmmmm.....that sure beats the .3% interest rate that I get on my credit union savings account.