SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): February 10, 2004
TRANSOCEAN INC.
(Exact name of registrant as specified in its charter)
CAYMAN ISLANDS 333-75899 66-0582307
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation or File Number) Identification No.)
organization)
4 GREENWAY PLAZA
HOUSTON, TEXAS 77046
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (713) 232-7500
ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE.
In a press release issued on February 10, 2004, Transocean Inc. (together
with its subsidiaries, excluding TODCO and its subsidiaries, the "Company" or
"we") announced the closing of its public offering of 13,800,000 shares of Class
A common stock of TODCO, the Company's Gulf of Mexico Shallow and Inland Water
subsidiary. The offering price was $12.00 per share. The closing included
1,800,000 shares relating to the underwriters' over-allotment option, which was
exercised in full. We received approximately $150.2 million of proceeds from
the offering, net of underwriting fees and estimated expenses. We intend to use
the proceeds for the reduction of corporate debt and general corporate purposes.
The press release is incorporated herein by reference.
After the closing of the offering, we own 46,200,000 shares of TODCO's
outstanding Class B common stock (representing 100% of the outstanding shares of
the class), giving us 94% of the combined voting power of TODCO's outstanding
common stock. We do not own any of TODCO's outstanding Class A common stock.
Generally, the Class B common stock is entitled to five votes per share, and the
Class A common stock is entitled to one vote per share, on all matters on which
stockholders are entitled to vote.
Our current long term intent is to dispose of the TODCO common stock that
we own. We could elect to dispose of the TODCO common stock in a number of
different types of transactions, including additional public offerings of the
TODCO common stock, open market sales of the TODCO common stock, sales of the
TODCO common stock to one or more third parties, spin-off distributions of the
TODCO common stock to our shareholders, split-off offerings to our shareholders
that would allow for the opportunity to exchange our shares for shares of our
common stock or a combination of these transactions. However, the determination
whether, and if so, when, to proceed with any of these transactions is entirely
within our discretion. Our current preference would be to receive cash in any
transaction disposing of TODCO's common stock. We are not subject to any
contractual obligation to maintain our share ownership, except that we have
agreed with the underwriters for the offering not to sell or otherwise dispose
of any shares of TODCO's common stock until July 9, 2004, subject to certain
exceptions.
Master Separation Agreement
We entered into a master separation agreement with TODCO that provides for
the completion of the separation of TODCO's business from ours. It also governs
aspects of the relationship between us and TODCO following the offering. The
master separation agreement provides for cross-indemnities that generally place
financial responsibility on TODCO and its subsidiaries for all liabilities
associated with the businesses and operations falling within the definition of
TODCO's business, and that generally place financial responsibility for
liabilities associated with all of our businesses and operations with us,
regardless of the time those liabilities arise.
Under the master separation agreement we also agreed to generally release
TODCO, and TODCO agreed to generally release us, from any liabilities that arose
Prior
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to the closing of the offering, including acts or events that occurred in
connection with the separation or the offering; provided, that specified ongoing
obligations and arrangements between TODCO and our company are excluded from the
mutual release.
The master separation agreement defines the TODCO business to generally
mean contract drilling and similar services for oil and gas wells using jackup,
submersible, barge and platform drilling rigs in the U.S. Gulf of Mexico and
U.S. inland waters; contract drilling and similar services for oil and gas wells
in and offshore Mexico, Trinidad, Colombia and Venezuela; and TODCO's joint
venture interest in Delta Towing Holdings, LLC. Our business is generally
defined to include all of the businesses and activities not defined as the TODCO
business and specifically includes contract drilling and similar services for
oil and gas wells using semisubmersibles and drillships in the U.S. Gulf of
Mexico; contract drilling and similar services for oil and gas wells in
geographic regions outside of the U.S. Gulf of Mexico, U.S. inland waters,
Mexico, Colombia, Trinidad and Venezuela; oil and gas exploration and production
activities; coal production activities; and the turnkey drilling business that
TODCO formerly operated in the U.S. Gulf of Mexico and offshore Mexico.
The master separation agreement also contains several provisions regarding
TODCO's corporate governance and accounting practices that apply as long as we
own specified percentages of TODCO's common stock. As long as we own shares
representing a majority of the voting power of TODCO's outstanding voting stock,
we will have the right to nominate for designation by TODCO's board of
directors, or a nominating committee of the board, a majority of the members of
the board, as well as the chairman of the board, and designate at least a
majority of the members of any committee of TODCO's board of directors.
If our beneficial ownership of TODCO's common stock is reduced to a level
of at least 10% but less than a majority of the voting power of TODCO's
outstanding voting stock, we will have the right to designate for nomination a
number of directors proportionate to our voting power and designate one member
of any committee of TODCO's board of directors.
Tax Sharing Agreement
Our wholly owned subsidiary, Transocean Holdings Inc. ("Transocean
Holdings"), has entered into a tax sharing agreement with TODCO in connection
with the offering. The tax sharing agreement governs Transocean Holdings' and
TODCO's respective rights, responsibilities and obligations with respect to
taxes and tax benefits, the filing of tax returns, the control of audits and
other tax matters. Under this agreement, all U.S. federal, state, local and
foreign income taxes and income tax benefits (including income taxes and income
tax benefits attributable to the TODCO business) that accrued on or before the
closing of the offering generally will be for the account of Transocean
Holdings. Accordingly, Transocean Holdings generally will be liable for any
income taxes that accrued on or before the closing of the offering, but TODCO
generally must pay Transocean Holdings for the amount of any income tax benefits
created on or before the closing of the offering ("pre-closing tax benefits")
that it uses or absorbs on a
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return with respect to a period after the closing of the offering. Income taxes
and income tax benefits accruing after the closing of the offering, to the
extent attributable to Transocean Holdings or its affiliates (other than TODCO
or its subsidiaries), generally will be for the account of Transocean Holdings
and, to the extent attributable to TODCO or its subsidiaries, generally will be
for the account of TODCO. However, TODCO will be responsible for all taxes,
other than income taxes, attributable to the TODCO business, whether accruing
before, on or after the closing of the offering.
Exceptions to the general allocation rules discussed above may apply with
respect to specific tax items or under special circumstances, including in
circumstances where TODCO's use or absorption of any pre-closing tax benefit
defers or precludes its use or absorption of any income tax benefit created
after the closing of the offering or arises out of or relates to the alternative
minimum tax provisions of the U.S. Internal Revenue Code. In addition, TODCO
must pay Transocean Holdings for any tax benefits otherwise attributable to
TODCO that result from the delivery by Transocean or its subsidiaries, after the
closing of the offering, of stock of Transocean to an employee of TODCO in
connection with the exercise of an employee stock option. If any person other
than Transocean or its subsidiaries becomes the beneficial owner of greater than
50% of the aggregate voting power of TODCO's outstanding voting stock, TODCO
will be deemed to have used or absorbed all pre-closing tax benefits and
generally will be required to pay Transocean Holdings a specified amount for
these pre-closing tax benefits at the time the requisite voting power is
attained. Moreover, if any of TODCO's subsidiaries that join with TODCO in the
filing of consolidated returns ceases to join in the filing of such returns,
TODCO will be deemed to have used that portion of the pre-closing tax benefits
attributable to that subsidiary following the cessation, and TODCO generally
will be required to pay Transocean Holdings a specified amount for this deemed
tax benefit at the time such subsidiary ceases to join in the filing of such
returns.
Other Agreements
In addition to the agreements described above, we also entered into the
following agreements with TODCO: (1) a transition services agreement under
which we will provide specified administrative support during the transitional
period following the closing of the offering, (2) an employee matters agreement
that allocates specified assets, liabilities and responsibilities relating to
TODCO's current and former employees and their participation in our benefit
plans under which we have generally agreed to indemnify TODCO for employment
liabilities arising from any acts of our employees or from claims by our
employees against TODCO and for liabilities relating to benefits for our
employees (and TODCO has generally agreed to similarly indemnify us) and (3) a
registration rights agreement under which TODCO has agreed to register the sale
of shares of TODCO's common stock held by us under the Securities Act of 1933,
as amended, and granted us "piggy-back" registration rights.
Description of the Agreements
The descriptions of the master separation agreement, the tax sharing
agreement, the transition services agreement, the employee matters agreement and
the registration
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rights agreement are not complete and are qualified in their entirety by
reference to the provisions of each such agreement, copies of which have been
filed, as Exhibit 99.2, Exhibit 99.3, Exhibit 99.4, Exhibit 99.5 and Exhibit
99.6, respectively, and which are incorporated herein by reference.
Conflicts
Three of our executive officers are directors of TODCO, and one of our
nonemployee directors is also a director of TODCO. As a result of their
positions, these directors may have potential conflicts of interest as to
matters relating to TODCO and Transocean. In connection with any transaction or
other relationship involving the two companies, these directors may need to
recuse themselves and not participate in any board action relating to these
transactions or relationships. In addition, our interests may conflict with
those of TODCO in a number of areas relating to our past and ongoing
relationships. We may not be able to resolve any potential conflicts with TODCO
and, even if we do, the resolution may be less favorable than if we were dealing
with an unaffiliated third party.
Forward-Looking Statements
Statements regarding use of proceeds from the offering, our plans with
respect to TODCO and its securities, arrangements in the future under the
various separation agreements, potential conflicts of interest and board
decisions, as well as any other statements that are not historical facts in this
report are forward-looking statements that involve certain risks, uncertainties
and assumptions. These include but are not limited to securities market
conditions, the results of operations of our company and TODCO, our cash
requirements, conflicts of interest, arrangements between TODCO and our company
and factors detailed in our Annual Report on Form 10-K for the year ended
December 31, 2002 and other filings with the Securities and Exchange Commission.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those indicated.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit Number Description
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99.1 Transocean Inc. Press Release Issued February 10, 2004
Announcing Closing of the TODCO Public Offering.
99.2 Master Separation Agreement dated February 4, 2004 by
and among Transocean Inc., Transocean Holdings Inc. and
TODCO.
99.3 Tax Sharing Agreement dated February 4, 2004 between
Transocean Holdings Inc. and TODCO.
99.4 Transition Services Agreement dated February 4, 2004
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between Transocean Holdings Inc. and TODCO.
99.5 Employee Matters Agreement dated February 4, 2004 by
and among Transocean Inc., Transocean Holdings Inc. and
TODCO.
99.6 Registration Rights Agreement dated February 4, 2004
between Transocean Inc. and TODCO.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRANSOCEAN INC.
Date: March 2, 2004 By: /s/ William E. Turcotte
------------------------------
William E. Turcotte
Associate General Counsel and
Assistant Secretary
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INDEX TO EXHIBITS
Exhibit Number Description
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99.1 Transocean Inc. Press Release Issued February 10, 2004
Announcing Closing of the TODCO Public Offering.
99.2 Master Separation Agreement dated February 4, 2004 by
and among Transocean Inc., Transocean Holdings Inc. and
TODCO.
99.3 Tax Sharing Agreement dated February 4, 2004 between
Transocean Holdings Inc. and TODCO.
99.4 Transition Services Agreement dated February 4, 2004
between Transocean Holdings Inc. and TODCO.
99.5 Employee Matters Agreement dated February 4, 2004 by
and among Transocean Inc., Transocean Holdings Inc. and
TODCO.
99.6 Registration Rights Agreement dated February 4, 2004
between Transocean Inc. and TODCO.
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