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Transocean Rebuffs Icahn Proposals

Thu, 03/07/2013 - 11:07am

NEW YORK (AP) -- Oil drilling company Transocean is rebuffing billionaire investor Carl Icahn's board proposals and his continued push for a higher dividend.

Swiss-based Transocean Ltd. owned the Deepwater Horizon drilling rig which exploded and sank in the Gulf of Mexico in 2010, triggering the nation's worst offshore oil spill. The company recently reached an agreement with the Justice Department over its role in the massive oil spill.

Icahn, who has a 5.6 percent stake in the company, said in a letter sent to Transocean's shareholders on Thursday that he's told Transocean he will put forward several items at the company's annual shareholders meeting: three board nominees, a proposal to repeal the company's staggered board and his push for a dividend of $4 per share.

Icahn said he believes a higher dividend payout "is the only way that Transocean will consistently employ a disciplined and sensible approach to capital allocation."

Icahn said the company has a "failed capital allocation strategy," and he feels that it must replace the board member that helped created the strategy, which he says includes Chairman Michael Talbert.

Transocean said in a statement that it is still backing its plans for a $2.24 per share dividend.

"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," the company said.

Transocean also said it is confident in the expertise of its 13 board members and that it plans to speed up the repayment of its debt. The company said its goal is to retire about $1 billion of debt in excess of existing repayment obligations by the end of next year. Transocean said it will also continue to evaluate alternative corporate and financing structures.

Transocean rose 7 cents to $53.52 in morning trading.

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