Transocean Receives Proposal from Carl Icahn

Transocean Ltd. announced that certain Funds affiliated with Carl Icahn submitted to the company for vote at its 2013 Annual General Meeting of Shareholders (AGM) a dividend proposal of $4.00 per share. Additionally, the Funds provided a notice of nomination of three director candidates for election to Transocean's Board of Directors at its 2013 AGM and a proposal to repeal the company's staggered board. The Transocean Board of Directors will evaluate the proposals in due course.

In response to Mr. Icahn's proposals, Transocean issued the following statement:

In the interest of all of its stakeholders, and in the context of a cyclical and capital-intensive industry, the Board is focused on driving long-term value through the execution of the company's disciplined capital allocation strategy. This strategy includes maintaining a strong, flexible balance sheet and an investment grade rating on its debt; profitable investment in the business through value-enhancing opportunities; and the distribution of excess cash to shareholders.

The Board is confident that its proposed $2.24 per share dividend, or approximately $800 million in the aggregate, will maximize long-term value creation and, importantly, establishes a basis that is sustainable and supports future increases as business conditions warrant. The proposed dividend resulted from the careful consideration of numerous factors relevant to the company's business, including operating in a cyclical and capital-intensive industry, the remaining uncertainties related to the Macondo well incident, the Frade field incident in Brazil and the ongoing tax litigation in Norway. The Board believes that, in the context of the uncertainties the company currently faces, a larger dividend would be overly aggressive and detrimental to the company's long-term performance. 

Additionally, as part of its prudent, balanced capital allocation strategy to facilitate continued progress towards achieving its articulated gross debt target of $7 billion to $9 billion, the company intends to accelerate repayment of its debt with the objective of retiring approximately $1 billion of debt in excess of existing repayment obligations by the end of 2014.   

The company is confident that its Board of Directors comprises professionals with the essential financial, operational, managerial and corporate governance expertise necessary to continue to successfully oversee the execution of the company's strategy. Transocean's Board comprises 13 highly-qualified directors with diverse perspectives on the industry, most of whom are independent, and all are proven business leaders with a broad and deep range of leadership experience in, variously, oilfield and offshore drilling services, finance, manufacturing, law, health, safety and environment, or other areas crucial to the company's business. 

Transocean's approach to corporate governance is to regularly infuse fresh perspective into an experienced and knowledgeable Board. In this regard, six of the 12 independent directors have been added to the Board in the last two years. Furthermore, the company believes that the addition of Frederico F. Curado will benefit the Board's decision-making process as a result of his significant senior management experience at a global aerospace corporation, including his experience with Brazilian business and governmental sectors – an important region of operations for the company.

With the guidance of the Board, the company has made meaningful progress in improving its operational performance and executing its objective of rationalizing its fleet and increasing its exposure to high specification drilling assets. This includes divesting 38 shallow water drilling rigs in the fourth quarter of 2012 and completing numerous single-asset sales of non-core floaters and jackups over the past several years. Additionally, in late 2012, the company announced it would build four industry-leading, state-of-the-art, high specification, ultra-deepwater drillships for Shell. These fully-contracted assets represent 40-rig years of work and an unprecedented $7.6 billion of long-dated backlog for the company and, together with the three newbuild high-specification jackups to be delivered in 2013, support the company's objective to deliver profitable growth and enhance its global leadership position in high-specification floaters and jackups.  

Management and the Board continually assess both the company's strategy and additional ways of creating value for shareholders. This is evidenced by the proposed $2.24 per share dividend, the accelerated debt repayment plan and the announcement that the company will continue its evaluation of alternative corporate and financing structures. However, the Board does not intend to take steps that will threaten the company's long-term performance, operating flexibility and investment grade credit rating. The Board looks forward to continuing a strategy based on maintaining a strong, flexible balance sheet; profitable investment in the business through value-enhancing opportunities; and sustainable return of capital with the goal of future increases should business conditions warrant.

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