Transocean Partners LLC, a spin-off from Transocean Ltd. (RIG), has filed with the U.S. Securities and Exchange Commission (SEC) for an initial public offering (IPO) of 17.5 million common units in the new company. The expected price range for the offering is between $19 and $21 per common unit.
The underwriters of the offering have a 30-day option on an additional 2.63 million common units. Lead underwriters are Morgan Stanley and Barclays. The common units are expected to trade on the New York Stock Exchange under the ticker symbol “RIGP”.
None of the proceeds from the IPO will go to Transocean Partners. The selling unitholder is Transocean Partners Holdings Ltd. which currently owns 100% of the common units of the Transocean Parters and will own 51.4% following the IPO if the underwriters’ option is exercised (57.7% otherwise). Transocean Partners Holdings Ltd. is wholly owned by Transocean Ltd.
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The proceeds of the IPO will purchase a 51% in three of Transocean Ltd.’s existing rigs. Two drillships operated by Transocean for Chevron Corp. (CVX) and one semisubmersible rig on contract to BP plc (BP). All three are located in the Gulf of Mexico. The two Chevron rigs are under contract through 2018 and 2020 at a dayrate ranging from $526,000 to $590,000. The contract with BP ends in 2016 and the dayrate on that rig is $428,000.
Transocean Partners LLC is a Marshall Islands-registered firm and the company said it will be resident in the U.K. (Scotland) for tax purposes. The company does not expect to pay Marshall Islands taxes, nor does it expect to pay “a material amount” of tax in the U.K. Because the new company will work in the U.S. Gulf of Mexico it will be subject to U.S. federal income tax under certain conditions. The new company expects to pay a minimum annual distribution of $1.45 in quarterly installments.
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Transocean Ltd. was the owner and operator of the Deepwater Horizon, the semisubmersible under contract to BP that exploded and killed 11 workers in 2010 and dumped millions of barrels of oil into the Gulf of Mexico. The company’s stock continues to trade about 50% below its price prior to the disaster.