R&B FALCON CORP company history: the story so far

History

R&B Falcon, an offshore driller, was absorbed by Transocean Sedco Forex in January 2001 and then reorganised inside its new parent group, selling nine rigs for debt relief and notes.

2000: Selling up ahead of a merger

By October 2000, R&B Falcon was an offshore drilling company with a merger pending. Under an agreement dated August 19, 2000, it was to join Transocean Sedco Forex (TSF). It reported third-quarter net income of $27.3 million, against a $22.4 million loss a year earlier.

The merger terms required it to sell its coastwise-trade vessels (crew boats, towing vessels and barges) before closing. It had already sold its Gulf of Mexico oil and gas properties for about $127.2 million, with a pre-tax gain of about $68.0 million, and two drillships for $23.0 million. Further sales were lined up: its 38.6% stake in Navis ASA for $83.0 million, which depended on Petrobras accepting a drillship, and Israeli oil and gas property for $114.0 million. Disputes remained, including a Petrobras demand for $10.0 million of late-delivery penalties, which the company contested, claiming about $7.0 million in unpaid fees, and an antitrust suit.

On November 2, it offered to buy back all of its 13 7/8% preferred stock for $1,300 per share in cash. The result was not reported.

2001-2002: Inside the TSF group

The merger closed on January 31, 2001, with each R&B Falcon share converted into 0.5 TSF shares. R&B Falcon became a wholly owned indirect subsidiary of TSF. In January 2001 it ended the registration of a class of securities, ending its reporting duty for them.

On August 17 and 19, 2001, R&B Falcon and a subsidiary sold nine rigs, including the Deepwater Horizon, Deepwater Expedition and Jack Bates, to another TSF subsidiary. In return, $1,190 million of debt owed to its parent was cancelled or transferred, and it received $425 million of 5.72% notes due 2011, priced on an independent rig broker's appraisal. It kept using the rigs for its drilling contracts through charters or other arrangements. This was a reshuffle within the group, not a sale to outsiders.

As of June 30, 2001, it carried long-term debt of $1,744.8 million and related-party advances of $1,346.6 million. In March 2002 it filed two more notices ending registration of securities classes.

Written from the 6 story beats below (2000 to 28 Mar 2002), which come from the company's own announcements and filings.

Beat by beat

The events that changed the company's story, in plain English, each written against everything known about the company at the time. The dot shows whether it was good, bad or neutral for shareholders.

2002

28 Mar
R&B FALCON CORP terminated the registration of a class of securities, ending its reporting obligation for them.
listing compliance notice
28 Mar
R&B FALCON CORP terminated the registration of a class of securities, ending its reporting obligation for them.
listing compliance notice

2001

31 Aug
On August 17 and 19, 2001, R&B Falcon and a subsidiary sold nine drilling units (including the Deepwater Horizon, Deepwater Expedition and Jack Bates) to another Transocean Sedco Forex subsidiary. In return, $1,190 million of debt R&B Falcon owed to its parent was cancelled or transferred and it received $425 million of 5.72% promissory notes due 2011, priced on an independent rig broker's appraisal. The filing confirms the January 31, 2001 merger closed (each R&B Falcon share converted into 0.5 Transocean Sedco Forex shares), so this is an internal restructuring within the parent group rather than a sale to outsiders. R&B Falcon still uses the rigs for its customer contracts through charters or other arrangements.
business combination
5 Jan
R&B FALCON CORP terminated the registration of a class of securities, ending its reporting obligation for them.
listing compliance notice

2000

2 Nov
R&B Falcon launched a tender offer to buy back all of its 13 7/8% Senior Cumulative Redeemable Preferred Stock for $1,300.00 per share in cash (356,961.014 shares outstanding as of October 26, 2000, with about 12,382 more to be issued as a dividend paid in kind on November 1). Preferred shares that are not tendered can be redeemed by the company, up to 105,000 shares pro rata, at $1,138.75 per share plus accrued unpaid dividends. The filing also says that after the Transocean Sedco Forex merger, dividends on the shares are expected to be paid in cash rather than in kind. This ties to the pending merger, and the offer terms are the only outcome stated here.
business combination
26 Oct
R&B Falcon reported Q3 2000 net income of $27.3 million (versus a $22.4 million loss a year earlier) and updated shareholders on the pending August 19, 2000 merger with Transocean Sedco Forex. The merger agreement requires it to sell its coastwise-trade vessels (crew boats, towing vessels, barges) before closing, and it expects a price at least equal to book value, with no assurance of that. It also has a deal to sell its 38.6% stake in Navis ASA plus a management contract for $83.0 million, which depends on Petrobras accepting the Navis Explorer I drillship by December 31, 2000 (not yet accepted because of blowout preventer problems), and the Israeli oil and gas property sale for $114.0 million is expected in Q4. Completed items include the Gulf of Mexico oil and gas property sale (about $127.2 million, about $68.0 million pre-tax gain) and the drillships Falcon Duchess and Falcon Ice sold for $23.0 million. Open issues include a Petrobras demand for $10.0 million of late-delivery penalties on the Deepwater Expedition (disputed, with the company claiming about $7.0 million in unpaid mobilization fees), an antitrust suit (Bryant) and a Cliffs Drilling well charge of $1.7 to $5.2 mi
business combination