By Saabira Chaudhuri
Transocean Ltd. (RIG) defended its current dividend, after
activist investor Carl Icahn submitted a proposal for the
offshore-oil driller to raise the payout by 79% and also nominated
three people to Transocean's board.
"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,"
Transocean said in a statement.
The Switzerland-based company currently pays a dividend of $2.24
a share, which it emphasized is sustainable and results from
careful consideration of a number of relevant factors.
Mr. Icahn in January increased his stake in Transocean to 5.6%
and urged the company to declare a $4-a-share dividend, saying he
believed the company's shares are undervalued.
Swiss law stipulates a shareholder has the right to propose a
dividend at a company's annual meeting, and the dividend would be
declared upon majority-shareholder support, regardless of whether
the company's board is supportive. Mr. Icahn had said he planned to
propose the $4-a-share dividend at this year's annual meeting if
Transocean's board didn't declare one of at least that amount.
At the time, he also said he would have additional discussions
with Transocean management about the business and strategies, as
well as the potential addition of shareholder-selected nominees to
the board.
On Thursday, Transocean also said it would accelerate the
repayment of its debt and is aiming to retire about $1 billion more
in debt by the end of 2014.
The company also talked up its board members, characterizing
them as "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."
Mr. Icahn has been active in energy investments in the last
year, taking stakes in such companies as refiner CVR Energy Inc.
(CVI) and Chesapeake Energy Corp. (CHK), the second-largest
natural-gas producer in the U.S. His Chesapeake investment helped
spur major corporate-governance changes at the company, including
the replacement of a majority of the board.
Earlier this week, Mr. Icahn wrote a letter to the board of Dell
Inc. (DELL), proposing a $9-per-share special dividend if a planned
$24.4 billion leveraged buyout by founder Michael Dell fails.
Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com
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