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Transocean Partners submits IPO filing

  • Transocean (NYSE:RIG) spinoff Transocean Partners (Pending:RIGP) files for an IPO of 17.5M common units at an expected price range of $19-$21.
  • Expected net proceeds of as much as $423M will purchase a 51% stake in three of RIG’s existing drillships; all are working in the Gulf of Mexico, with two operated by RIG for Chevron under contract through 2018 and 2020 at dayrates of $590K and $526K, and one semisubmersible rig on contract to BP until 2016 at a dayrate of $428K.
  • Following the IPO and assuming exercise of the underwriters' provision, RIG would own 49% of RIGP.
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Comments (10)
  • spondrei
    , contributor
    Comments (77) | Send Message
     
    Is $RIGP going to be an MLP? If so, i wonder what the div yield will be based on the IPO price of $19-$21.
    22 Jul, 05:19 PM Reply Like
  • User 21682631
    , contributor
    Comment (1) | Send Message
     
    $1.45 annually, in quarterly installments
    22 Jul, 06:17 PM Reply Like
  • TGC004
    , contributor
    Comments (444) | Send Message
     
    Here is what I found on the RIG investor relations page:

     

    ABERDEEN, SCOTLAND, July 22, 2014 – Transocean Partners LLC, a Marshall Islands limited liability company formed by Transocean Ltd., announced today that it has commenced an initial public offering of 17,500,000 common units representing limited liability company interests pursuant to a Registration Statement on Form S-1 previously filed with the U.S. Securities and Exchange Commission (“SEC”). All of the common units are being offered by Transocean Partners Holdings Limited, a wholly owned subsidiary of Transocean Ltd. The underwriters of the offering are expected to be granted a 30-day option to purchase up to an additional 2,625,000 common units from Transocean Partners Holdings Limited. The common units are expected to trade on the New York Stock Exchange under the ticker symbol “RIGP.”

     

    The common units being offered represent a 25.4 percent limited liability company interest in Transocean Partners LLC, or a 29.2 percent limited liability company interest if the underwriters exercise in full their option to purchase additional common units. Transocean Ltd., through Transocean Partners Holdings Limited, will own the remaining limited liability company interests in Transocean Partners.

     

    Morgan Stanley, Barclays, Citigroup, J.P. Morgan and Wells Fargo Securities are acting as joint book-running managers for the offering. Credit Suisse, Goldman, Sachs & Co., BofA Merrill Lynch, DNB Markets, MUFG, Credit Agricole CIB and Standard Chartered are acting as co-managers. The offering is being made only by means of a prospectus. When available, copies of the preliminary prospectus may be obtained from:

     

    Morgan Stanley
    Attn: Prospectus Department
    180 Varick Street, 2nd Floor
    New York, NY 10014
    Telephone: 866-718-1649
    Email: prospectus@morganstanl...

     

    Barclays
    c/o Broadridge Financial Solutions
    1155 Long Island Avenue
    Edgewood, New York 11717
    Email: barclaysprospectus@bro...
    Telephone: (888) 603-5847

     

    Citigroup
    c/o Broadridge Financial Solutions
    1155 Long Island Avenue
    Edgewood, New York 11717
    Telephone: (800) 831-9146

     

    J.P. Morgan
    c/o Broadridge Financial Solutions
    1155 Long Island Avenue
    Edgewood, New York 11717
    Telephone: (866) 803-9204

     

    Wells Fargo Securities

     

    Doesn't sound like an MLP as it is an LLC - I requested a prospectus from one of the underwriters, once I get a copy I will post what I find out. The SEC website didn't seem to have anything on this filing. Not sure why.
    22 Jul, 09:08 PM Reply Like
  • TGC004
    , contributor
    Comments (444) | Send Message
     
    ok - if you go to SEC.gov and search under EDGAR you can find the filing under "Transocean Partners". Here is a copy from the S-1A of the tax exerpt

     

    We are organized as a limited liability company that is treated as a corporation for U.S. federal income tax purposes. Consequently, distributions you receive from us will constitute dividends to the extent of our current-year or accumulated earnings and profits (as computed for U.S. federal income tax purposes). The remaining portion of such distributions will be treated first as a non-taxable return of capital to the extent of your tax basis in your common units and thereafter as capital gain. We estimate that if you hold the common units that you purchase in this offering through the period ending December 31, 2016, the distributions you receive, on a cumulative basis, that will constitute dividends for U.S. federal income tax purposes will be less than 20 percent of the total cash distributions received during that period. Please read “Material U.S. Federal Income Tax Considerations—U.S. Holders—Ratio of Dividend Income to Distributions” for the basis for this estimate. For a discussion of other material U.S. federal income tax consequences that may be relevant to prospective unitholders, please read “Material U.S. Federal Income Tax Considerations.”
    22 Jul, 09:21 PM Reply Like
  • spaldo
    , contributor
    Comments (13) | Send Message
     
    The company should be spinning the new MLP out to existing shareholders as Noble PlC is.
    As shareholders you already own these assets. We are getting ripped off in my opinion. Any thoughts from others?
    23 Jul, 02:11 AM Reply Like
  • Profit Propositions
    , contributor
    Comments (259) | Send Message
     
    As a shareholder you are not getting ripped off. As a shareholder you still control 87% of cash flows associated with those three rigs and for the 13% that you divest to RIGP new shareholders, you as a RIG shareholder receive 350-400 million of cash. This divestiture automatically increases the value of those 3 rigs by 50% compared to what the market is currently assigning based on RIG's today's market price.
    23 Jul, 04:48 AM Reply Like
  • spaldo
    , contributor
    Comments (13) | Send Message
     
    Thanks for the response.
    My problem is all the cash is going to the company, and they can use it for whatever.
    To participate directly in the MLP cash flows, you have to purchase the shares on the IPO or the open market. My issue is that I already own the MLP assets as a shareholder of RIG. Why should I have to buy them again?
    I still think a direct spin off to shareholders like Noble did with their MLP is much more shareholder friendly.
    Hopefully they will spin off the rest of their interest directly to existing shareholders.
    23 Jul, 09:01 AM Reply Like
  • Profit Propositions
    , contributor
    Comments (259) | Send Message
     
    I understand your point, but even when you own 100% of cash flows as an investor, they still go to the company, unless the company pays back all of those cash flows in the form of dividends. RIG pays less than half of operating cash flows to its holders in the form of dividends and keeps the rest for general company purposes (mostly to pay for newbuilds). So all in all, the point of having control over cash flows is rather moot, but the point about capital appreciation of dropped down rigs will positively effect your investment's share price.
    23 Jul, 09:07 AM Reply Like
  • Profit Propositions
    , contributor
    Comments (259) | Send Message
     
    The article incorrectly states that RIG will own 49% of RIGP. That is factually incorrect, as RIG will own 74.6% of RIGP if underwriters do not exercise their over-allotment option. Should they exercise this option the RIG will own 70.8% of RIGP.
    23 Jul, 04:52 AM Reply Like
  • spaldo
    , contributor
    Comments (13) | Send Message
     
    Thanks for the reply.
    My problem with the IPO is that the company gets all the cash and can do whatever it wants with it.
    If I want to participate in RIGPs cash flows directly, I have to buy shares on the IPO or the aftermarket. My issue is that I own these assets already as a shareholder of RIG. Why should i have to buy them again?
    Noble's spin off of their MLP directly to current holders of their stock is much more shareholder friendly.
    Hopefully RIG will spin off their remaining ownership of RIGP to shareholders as well.
    23 Jul, 09:35 AM Reply Like
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