Transocean Partners LLC company history: the story so far

History

Transocean Partners listed in 2014 to own stakes in three rigs, then was bought back by its parent Transocean in December 2016 after a raised offer.

2014: Listing and the parent's rules

Transocean Partners LLC was created to hold interests in offshore drilling rigs alongside its parent, Transocean. On July 30, 2014 the New York Stock Exchange cleared its securities for listing. The initial public offering closed on August 5, 2014, when 20,125,000 common units were sold at $22.00 each. That included 2,625,000 units from the underwriters' extra-allotment option, with Morgan Stanley and Barclays leading the underwriters.

At the same time, the company signed an omnibus agreement with Transocean. Transocean agreed not to own rigs built in 2009 or later on contracts of five or more years unless it first offered them to the company, with some exceptions. The company agreed to offer Transocean any rigs outside that category. This set the rules for future rig transfers from the parent.

The company held 51% interests in subsidiaries that owned and operated three ultra-deepwater rigs: the Discoverer Inspiration and Discoverer Clear Leader, both on contract to Chevron, and the Development Driller III, on contract to BP. All three worked in the US Gulf of Mexico. The record for 2015 and early 2016 is quiet in the major events. Quarterly results through 2016 showed rising revenue, from $144.0 million in the first quarter to $160.0 million in the third.

2016: The buyout by the parent

On July 31, 2016, Transocean Partners agreed to be acquired by Transocean Ltd. Public unitholders would receive 1.1427 Transocean shares per unit. Approval was needed from about 50.1% of the roughly 19.7 million units not held by Transocean, and non-votes counted as votes against.

The vote proved hard to win. At the November 11 meeting, a preliminary count showed about 46.8% of public units intending to vote in favour, short of the target, and about 37.6% had not submitted a proxy. The meeting was adjourned, then adjourned again on November 16 to December 6.

On November 21, the two companies raised the offer to 1.2000 Transocean shares per unit, about 23.8 million shares in total. The conflicts committee approved the increase, though the filing did not say why it was made.

The merger closed on December 9, 2016. Each public unit was converted into 1.2000 Transocean shares, and Transocean Partners became an indirect wholly owned subsidiary of Transocean. The NYSE moved to delist the units, and all previous directors left, with Garry Taylor becoming President, CEO and CFO. On December 19, the company terminated the registration of a class of its securities, ending its reporting obligation for them. The BP contract on the Development Driller III had ended in November 2016, and no follow-on was stated.

Written from the 10 story beats below (2014 to 19 Dec 2016), 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.

shares on issue market cap (log scale)

201641.1m shares · US$732m market cap

19 Dec
Transocean Partners LLC terminated the registration of a class of securities, ending its reporting obligation for them.
listing compliance notice
41.1m shUS$732m
9 Dec
Transocean Partners LLC's exchange filed to remove a class of its securities from listing.
listing compliance notice
41.1m shUS$732m
9 Dec
On December 9, 2016 the merger with Transocean Ltd. closed, with Transocean Partners surviving as an indirect wholly owned subsidiary of Transocean. Each public common unit was converted into 1.2000 Transocean shares (the raised ratio from the November 21 amendment). The NYSE filed to delist the units and the company intends to file a Form 15 to suspend its reporting obligations. All of the company's directors and the CEO/CFO (Kathleen McAllister) left; Garry Taylor became President, CEO and CFO, with Ian Paterson and David Walls elected as directors. This resolves the merger thread: public unitholders are bought out for Transocean shares and the units no longer trade.
asset acquisition disposition
41.1m shUS$732m
21 Nov
On November 21, 2016 Transocean Ltd. and Transocean Partners amended the July 31 merger agreement, raising the payment to public unitholders from 1.1427 to 1.2000 Transocean shares per common unit (about 23.8 million shares to be issued in total). The conflicts committee approved the increase and the board and committee recommend a 'FOR' vote. Approval by about 9.9 million (~50.1%) of the ~19.7 million public units is still required, and the adjourned meeting reconvenes December 6, 2016; the company expects closing in early December 2016. This changes the terms of the pending buyout after the earlier votes fell short of the threshold (the filing itself does not state why the ratio was raised).
business combination
41.1m shUS$462m
16 Nov
On November 16, 2016 the meeting was reconvened and adjourned again without a vote, to December 6, 2016 at 3:00 p.m. in London. The company continues to solicit proxies and says a non-vote is effectively a 'No'. The filing does not give a new vote count, so the merger still has not been approved.
business combination
41.1m shUS$462m
14 Nov
The November 11 unitholder meeting was opened and adjourned without a vote, and will reconvene November 16, 2016, to gather more votes. A preliminary count showed about 46.8% of public common units intending to vote for the merger, short of the roughly 50.1% required, and about 7.4 million units (about 37.6%) had not submitted a proxy. The company says about 75% of the units that did submit proxies were in favour. The vote threshold was not yet met.
business combination
41.1m shUS$462m
6 Oct
The definitive proxy statement/prospectus, mailed around October 6, 2016, asks unitholders to vote on the Transocean merger at the November 11 meeting. It repeats the fixed 1.1427 Transocean shares per common unit, which it values at about $250 million in total at the July 29 price, and says public holders would own about 5.8% of Transocean afterwards. Approval needs 31,084,637 of 40,914,962 common units; Transocean's unit holder (21,254,310 units) has committed to vote for it, so another 9,830,327 units (about 50.1% of the public units) are needed, and non-votes count as 'against'. The conflicts committee and board unanimously recommend voting for it, and the units would stop trading publicly after closing.
business combination
41.1m shUS$506m
1 Aug
On July 31, 2016 Transocean Partners agreed to be acquired by its parent Transocean Ltd. Each public common unit not held by Transocean would convert into 1.1427 Transocean shares (a fixed ratio), with about 22.7 million Transocean shares to be issued. Closing needs approval by about 50.1% (roughly 9.9 million) of the ~19.7 million common units not held by Transocean, an effective S-4 registration statement and NYSE listing of the new shares. The Q3 2016 distribution will be at least $0.3625 per unit unless the conflicts committee approves otherwise. A $15 million termination fee or up to $2.5 million of expense reimbursement may be payable by the company to Transocean in certain terminations, and either side can terminate if the merger is not completed by January 31, 2017. This turns the 'possible dropdowns' thread into a buyout of the public units by the parent.
business combination
41.1m shUS$449m

2014

5 Aug
The IPO closed on August 5, 2014: parent Transocean Partners Holdings Limited sold 20,125,000 common units at $22.00 each (including 2,625,000 units from the underwriters' option, exercised August 4), with Morgan Stanley and Barclays as representatives of the underwriters. Alongside it, the company and its rig-owning subsidiaries signed an omnibus agreement with Transocean under which Transocean agreed not to own rigs built in 2009 or later that are on contracts of five or more years unless it offers them to the company, with exceptions; the company in turn agreed not to own rigs that fall outside that category unless it offers them to Transocean. This follows the registration, listing and director-sale filings and sets the rules for future rig dropdowns.
asset acquisition disposition
30 July
the New York Stock Exchange certified Transocean Partners LLC's securities for listing, clearing them to begin trading.
listing compliance notice