AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 18, 2002
REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
TRANSOCEAN SEDCO FOREX INC.
(Exact name of registrant as specified in its charter)
CAYMAN ISLANDS 1381 66-0582307
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
4 GREENWAY PLAZA
HOUSTON, TEXAS 77046
(713) 232-7500
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
ERIC B. BROWN, ESQ.
TRANSOCEAN SEDCO FOREX INC.
4 GREENWAY PLAZA
HOUSTON, TEXAS 77046
(713) 232-7500
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
WITH COPIES TO:
GENE J. OSHMAN, ESQ. ALAN J. SINSHEIMER, ESQ.
JOHN D. GEDDES, ESQ. SULLIVAN & CROMWELL
BAKER BOTTS L.L.P. 125 BROAD STREET
3000 ONE SHELL PLAZA NEW YORK, NEW YORK 10004
HOUSTON, TEXAS 77002 (212) 558-3588
(713) 229-1234
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable following the effectiveness of this registration
statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE(1) REGISTRATION FEE(1)
--------------------------------------------------------------------------------------------------------------------
6.50% Notes due 2003................. $ 239,500,000 100% $ 240,525,000 $ 22,128
--------------------------------------------------------------------------------------------------------------------
6.75% Notes due 2005................. $ 350,000,000 100% $ 354,580,000 $ 32,621
--------------------------------------------------------------------------------------------------------------------
6.95% Notes due 2008................. $ 250,000,000 100% $ 252,252,000 $ 23,207
--------------------------------------------------------------------------------------------------------------------
7.375% Notes due 2018................ $ 250,000,000 100% $ 250,510,000 $ 23,046
--------------------------------------------------------------------------------------------------------------------
9.125% Notes due 2003................ $ 87,112,000 100% $ 91,961,000 $ 8,460
--------------------------------------------------------------------------------------------------------------------
9.50% Notes due 2008................. $ 300,000,000 100% $ 348,078,000 $ 32,023
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Total................................ $1,476,612,000 $1,537,906,000 $141,487
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f)(2), based upon the book value of the outstanding
notes to be exchanged hereunder.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The information in this prospectus and consent solicitation statement is not
complete and may be changed. We may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus and consent solicitation statement is not an offer to
sell these securities and it is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
Subject to Completion, Dated January 18, 2002
PROSPECTUS AND CONSENT SOLICITATION STATEMENT
[TRANSOCEAN SEDCO FOREX LOGO]
OFFERS TO EXCHANGE AND SOLICITATIONS OF CONSENTS
RELATING TO THE FOLLOWING SERIES OF NOTES ISSUED BY
TRANSOCEAN SEDCO FOREX INC.'S INDIRECT WHOLLY-OWNED SUBSIDIARY,
R&B FALCON CORPORATION
--------------------------------------------------------------------------------------------------------------------
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CONSENT PAYMENT
AGGREGATE PRINCIPAL PER $1,000
TITLE OF SECURITIES AMOUNT OUTSTANDING CUSIP NUMBER PRINCIPAL AMOUNT
--------------------------------------------------------------------------------------------------------------------
6.50% Notes due April 15, 2003.......... $239.5 million 74912EAE1 $--
6.75% Notes due April 15, 2005.......... $ 350 million 74912EAF8 $--
6.95% Notes due April 15, 2008.......... $ 250 million 74912EAG6 $--
7.375% Notes due April 15, 2018......... $ 250 million 74912EAH4 $--
9.125% Notes due December 15, 2003...... $ 87.1 million 74912EAK7/
74912EAJ0 $--
9.50% Notes due December 15, 2008....... $ 300 million 74912EAM3 $--
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Transocean Sedco Forex offers, on the terms and subject to the conditions
set forth in this prospectus and consent solicitation statement and the
accompanying letter of transmittal and consent, to issue, in exchange for
properly tendered and accepted R&B Falcon notes of any series listed above, new
Transocean Sedco Forex notes having the same principal amount, interest rate,
redemption terms and payment and maturity dates (and accruing interest from the
last date for which interest has been paid on those R&B Falcon notes). In
addition, R&B Falcon will pay an amount in cash equal to the applicable consent
payment listed above to each holder of R&B Falcon notes accepted for exchange if
the holder has tendered those notes prior to the consent payment deadline
referred to below.
A holder validly tendering notes for exchange will, by tendering those
notes, be consenting to the amendments to the indenture under which those notes
were issued described under "The Proposed Amendments." Transocean Sedco Forex's
obligation to complete each exchange offer and cause R&B Falcon to make the
consent payments relating to that exchange offer is conditioned upon, among
other things, receipt of valid consents sufficient to effect these amendments
with respect to all six series of notes listed above, although Transocean Sedco
Forex will be free to waive this or any other condition with respect to any or
all of the exchange offers. For information about other conditions to Transocean
Sedco Forex's obligation to complete the exchange offers and cause R&B Falcon to
make the consent payments, see "Conditions to the Exchange Offers and Consent
Solicitations."
The consent payment deadline for each exchange offer (that is, the time by which
holders must tender the applicable series of R&B Falcon notes in order to be
eligible to receive the consent payment) will be 5:00 p.m., New York City time,
on , 2002, unless extended. Consents may be revoked at any time prior
to the consent payment deadline.
Each exchange offer will expire at 5:00 p.m., New York City time, on ,
2002, unless extended. Tenders may be withdrawn at any time prior to the
expiration date.
Transocean Sedco Forex does not intend to list the Transocean Sedco Forex
notes to be issued in the exchange offers on any national securities exchange or
on The Nasdaq Stock Market.
For a discussion of the risks that you should consider in evaluating the
exchange offers and consent solicitations, see "Risk Factors" beginning on page
14.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES BEING OFFERED IN THE
EXCHANGE OFFERS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS AND
CONSENT SOLICITATION STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------------------
None of Transocean Sedco Forex, R&B Falcon, the exchange agent, the
information agent, the trustee under the R&B Falcon indentures, the trustee
under the Transocean Sedco Forex indenture or the dealer managers makes any
recommendation as to whether or not holders of R&B Falcon notes should exchange
their securities in the applicable exchange offer and consent to the proposed
amendments to the R&B Falcon indentures.
----------------------
The dealer managers for the exchange offers and consent solicitations are:
GOLDMAN, SACHS & CO.
----------------------
The date of this prospectus and consent solicitation statement is ,
2002
The exchange offers and consent solicitations are not being made to, nor
will Transocean Sedco Forex accept, exchanges or consents from, holders of any
series of R&B Falcon notes in any jurisdiction in which the exchange offers, the
consent solicitations or the acceptance of outstanding R&B Falcon notes of that
series in exchange for the Transocean Sedco Forex notes would violate the
securities or blue sky laws of such jurisdiction.
You should rely only on the information contained or incorporated by
reference in this prospectus and consent solicitation statement. We have not
authorized any person (including any dealer, salesman or broker) to provide
information or make any representations other than that provided in this
prospectus and consent solicitation statement and, if given or made, such
information or representations must not be relied upon as having been authorized
by Transocean Sedco Forex, R&B Falcon, the dealer managers or any agent or
dealer. We are not making an offer of Transocean Sedco Forex notes in any state
where the offer is not permitted. You should not assume that the information in
this prospectus and consent solicitation statement is accurate as of any date
other than the date on the cover page or that any information contained in any
document we have incorporated by reference is accurate as of any date other than
the date of the document incorporated by reference.
----------------------
TABLE OF CONTENTS
PAGE
----
Where You Can Find More Information......................... iii
Prospectus Summary.......................................... 1
Risk Factors................................................ 14
Cautionary Statement Regarding Forward-Looking Statements... 20
Enforceability of Civil Liabilities Against Foreign
Persons................................................... 21
The Exchange Offers......................................... 23
Description of Differences between the R&B Falcon Notes and
the Transocean Sedco Forex Notes.......................... 34
The Proposed Amendments..................................... 50
Certain Related Transactions................................ 54
Description of the Transocean Sedco Forex Notes............. 55
Material U.S. Federal Income Tax Consequences............... 67
Cayman Islands Tax Consequences............................. 72
Transocean Sedco Forex Unaudited Pro Forma Financial
Information............................................... 73
R&B Falcon Corporation Unaudited Pro Forma Financial
Information............................................... 79
Validity of Notes........................................... 85
Experts..................................................... 85
ii
WHERE YOU CAN FIND MORE INFORMATION
Transocean Sedco Forex and R&B Falcon file annual, quarterly and current
reports, proxy statements and other information with the Securities and Exchange
Commission. You can read and copy these materials at the SEC's public reference
room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can obtain
information about the operation of the SEC's public reference room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains a Web site that contains
information we file electronically with the SEC, which you can access over the
Internet at http://www.sec.gov. Transocean Sedco Forex's ordinary shares are
listed on the New York Stock Exchange, and you can obtain information about
Transocean Sedco Forex at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005. Upon completion of the exchange offers,
Transocean Sedco Forex may apply (on Form 15) to the SEC to deregister the
common stock of R&B Falcon under the Securities Exchange Act of 1934, as
amended. As a result of the deregistration and the effectiveness of the proposed
amendments to the R&B Falcon indentures, R&B Falcon no longer will be obligated
to file periodic reports with the SEC. See "The Proposed Amendments."
This prospectus and consent solicitation statement is part of a
registration statement Transocean Sedco Forex has filed with the SEC relating to
the securities. As permitted by SEC rules, this prospectus and consent
solicitation statement does not contain all of the information we have included
in the registration statement and the accompanying exhibits and schedules. You
may refer to the registration statement, exhibits and schedules for more
information about us and our securities. The registration statement, exhibits
and schedules are available at the SEC's public reference room or through its
Web site.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information we incorporate by reference is
an important part of this prospectus and consent solicitation statement, and
later information that we file with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings Transocean Sedco Forex and R&B Falcon make with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 until we sell all the offered securities. The documents we incorporate by
reference are:
- Transocean Sedco Forex's Annual Report on Form 10-K for the year ended
December 31, 2000,
- Transocean Sedco Forex's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 2001, June 30, 2001 and September 30, 2001,
- Transocean Sedco Forex's Current Reports on Form 8-K and Form 8-K/A filed
with the SEC on February 7, 2001, February 26, 2001, March 23, 2001,
April 9, 2001, May 8, 2001, May 9, 2001, May 11, 2001 and January 2,
2002,
- R&B Falcon's Annual Report on Form 10-K for the year ended December 31,
2000,
- R&B Falcon's Quarterly Reports on Form 10-Q for the quarters ended March
31, 2001, June 30, 2001 and September 30, 2001,
- R&B Falcon's Current Reports on Form 8-K and Form 8-K/A filed with the
SEC on February 1, 2001, February 14, 2001, February 26, 2001, March 26,
2001 and August 31, 2001, and
- R&B Falcon's Form 8-A filed with the SEC on December 28, 2001.
In addition, we incorporate by reference any filings Transocean Sedco Forex
or R&B Falcon will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act
iii
of 1934 after the date of this registration statement and before the
effectiveness of the registration statement.
You may request a copy of these filings (other than an exhibit to those
filings unless we have specifically incorporated that exhibit by reference into
the filing), which we will provide at no cost, by writing or telephoning the
information agent at the address or telephone number set forth on the back cover
of this prospectus and consent solicitation statement. In order to ensure timely
delivery of these documents, you should make such request by , 2002 or
five days before any extension of the exchange offers, whichever is later.
iv
PROSPECTUS SUMMARY
The following summary does not purport to be complete and is qualified in
its entirety by, and should be read in conjunction with, the more detailed
financial information and consolidated financial statements, including the notes
thereto, included or incorporated by reference in this prospectus and consent
solicitation statement. In particular, holders of R&B Falcon notes should
carefully consider the information set forth under "Risk Factors."
TRANSOCEAN SEDCO FOREX INC.
We are a leading international provider of offshore and inland marine
contract drilling services for oil and gas wells. We are the result of the
merger of Transocean Offshore Inc. and Sedco Forex Holdings Limited in December
1999, and the subsequent merger with R&B Falcon Corporation in January 2001. On
December 31, 2001, Transocean Sedco Forex owned, had partial ownership interests
in or operated more than 160 mobile offshore and barge drilling units.
Transocean Sedco Forex's active fleet consists of 31 high-specification
drillships and semisubmersibles (floaters), 30 other floaters, 54 jackup rigs,
35 drilling barges, four tenders and three submersible drilling rigs. In
addition, the fleet includes mobile offshore production units, platform drilling
rigs and land and barge drilling rigs in Venezuela.
Our primary business is to contract our drilling rigs, related equipment
and work crews on a dayrate basis to drill oil and gas wells. We specialize in
technically demanding segments of the offshore drilling business with a
particular focus on deepwater and harsh environment drilling services. We also
provide additional services, including management of third-party well service
activities.
We are the world's largest offshore drilling company as measured by the
number of mobile offshore drilling units and equity market capitalization. We
have the largest fleet of rigs capable of working in water depths greater than
3,000 feet, as well as the largest fleet of jackup rigs and drilling barges. We
believe our diverse fleet positions us with the necessary geographical coverage,
technical capabilities, efficiencies and resources to meet our customers' needs
and to attract new customers.
We have a significant presence in all major offshore oil and gas drilling
areas, including the North Sea, West Africa, the U.S. Gulf of Mexico, Brazil and
Asia. Our infrastructure in these areas helps us meet our customers' needs on a
global basis and is set up to provide regional economies of scale. Our
geographic diversity helps reduce the possible impact of a future downturn in a
single region. Our longstanding commitment to operate in major markets has
increased our knowledge of our customers' region-specific needs, and helps us
build strong relationships with clients, vendors, regulators and others
important to our operations.
Transocean Sedco Forex is a Cayman Islands exempted company with principal
executive offices in the United States located at 4 Greenway Plaza, Houston,
Texas 77046. Our telephone number at that address is (713) 232-7500.
R&B FALCON CORPORATION
On January 31, 2001, Transocean Sedco Forex completed a merger transaction
with R&B Falcon. As a result of the merger, R&B Falcon became a wholly-owned
indirect subsidiary of Transocean Sedco Forex.
R&B Falcon is an international provider of offshore and inland marine
contract drilling services for oil and gas wells. On December 31, 2001, R&B
Falcon owned, had partial ownership interests in or operated more than 95 mobile
offshore and barge drilling units. R&B Falcon's active fleet consists of seven
high-specification floaters, one other floater, 38 jackup rigs, 31 drilling
barges, one tender and three submersible drilling rigs. In addition, the fleet
includes
1
mobile offshore production units, platform drilling rigs and land and barge
drilling rigs in Venezuela.
R&B Falcon Corporation is a Delaware company with principal executive
offices in the United States located at 4 Greenway Plaza, Houston, Texas 77046.
R&B Falcon's telephone number at that address is (713) 232-7500.
RECENT DEVELOPMENTS
On December 14, 2001, Transocean Sedco Forex announced that its Board of
Directors had appointed Robert L. Long as President, effective immediately. In
June 2002, Mr. Long will also assume the role of Chief Operating Officer upon
the retirement of Dennis Heagney, the current Executive Vice President and Chief
Operating Officer. Transocean Sedco Forex's Board has also appointed Gregory L.
Cauthen as the company's new Vice President, Chief Financial Officer and
Treasurer.
2
TRANSOCEAN SEDCO FOREX SELECTED HISTORICAL
AND PRO FORMA CONSOLIDATED FINANCIAL DATA
On December 31, 1999, the merger of Transocean Offshore Inc. and Sedco
Forex Holdings Limited was completed. Sedco Forex was the offshore contract
drilling service business of Schlumberger Limited and was spun off the day
before the merger transaction. As a result of the merger, Sedco Forex became a
wholly owned subsidiary of "Transocean Offshore Inc.", which changed its name to
Transocean Sedco Forex Inc. The merger was accounted for as a purchase, with
Sedco Forex as the acquiror for accounting purposes.
Transocean Sedco Forex prepared the selected historical consolidated
financial data in the following table using the consolidated financial
statements of Transocean Sedco Forex. Transocean Sedco Forex derived the
statement of operations and other financial data for the year ended December 31,
2000 and the balance sheet data as of December 31, 2000 and 1999 from its
consolidated financial statements and the statement of operations and other
financial data for the year ended December 31, 1999 from its combined financial
statements audited by Ernst & Young LLP, independent auditors. Transocean Sedco
Forex derived the statement of operations and other financial data for each of
the three years in the period ended December 31, 1998, and the balance sheet
data as of December 31, 1998 and 1997, from its combined financial statements
audited by PricewaterhouseCoopers LLP, independent accountants. Transocean Sedco
Forex derived the statement of operations and other financial data for the nine
months ended September 30, 2001 and 2000 and the balance sheet data as of
September 30, 2001 and 2000 from its unaudited consolidated financial statements
and the balance sheet data as of December 31, 1996 from its unaudited combined
financial statements. The unaudited interim financial statements for the nine
months ended September 30, 2001 and 2000 include all adjustments, consisting of
normal recurring adjustments, which Transocean Sedco Forex considers necessary
for a fair presentation of the financial position and the results of operations
for these periods. Operating results for the nine months ended September 30,
2001 are not necessarily indicative of the results that may be expected for the
entire year ended December 31, 2001. The data should be read in conjunction with
the related notes and other financial information incorporated by reference in
this prospectus and consent solicitation statement.
The balance sheet data as of December 31, 2000 and 1999 and September 30,
2001 and 2000 represent the consolidated financial position of Transocean Sedco
Forex, and the balance sheet data as of dates prior to the Transocean Offshore
Inc. and Sedco Forex merger reflect the financial position of Sedco Forex and
not that of historical Transocean Offshore Inc. The income statement data and
other financial data for the year ended December 31, 2000 and the nine months
ended September 30, 2001 and 2000 represent the operating results of Transocean
Sedco Forex and, for the periods prior to the Transocean Offshore Inc. and Sedco
Forex merger, reflect the operating results of Sedco Forex and not that of
historical Transocean Offshore Inc.
On January 31, 2001 Transocean Sedco Forex completed a merger transaction
with R&B Falcon. As a result of the merger, R&B Falcon became an indirect wholly
owned subsidiary of Transocean Sedco Forex. The merger was accounted for as a
purchase and Transocean Sedco Forex was the accounting acquiror. The selected
historical consolidated financial data as of and for the nine months ended
September 30, 2001 include eight months of operating results and cash flows for
R&B Falcon.
The pro forma consolidated statement of operations data assume that the
merger between Transocean Sedco Forex and R&B Falcon was completed on January 1,
2000. The pro forma information does not necessarily indicate what the operating
results of the combined company would have been had the merger been completed on
January 1, 2000, or what the future operating results of the combined company
will be. In particular, the unaudited pro forma consolidated statement of
operations data do not include adjustments to reflect any cost savings or other
operational efficiencies that may be realized as a result of the merger of
Transocean Sedco Forex and R&B Falcon, or any future merger-related
restructuring or integration expenses.
3
The pro forma consolidated statement of operations data for Transocean Sedco
Forex assumes the exchange offers were completed as of January 1, 2000 and that
all R&B Falcon notes were tendered by the applicable consent payment deadline
and not withdrawn. The historical financial information has been derived from
the consolidated financial statements of Transocean Sedco Forex and R&B Falcon
for the periods presented.
NINE MONTHS
ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
---------------- -----------------------------------------------
2001 2000 2000 1999 1998 1997 1996
------- ------ ------ ------ ------ ------ -----------
(IN MILLIONS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
(UNAUDITED)
HISTORICAL STATEMENT OF
OPERATIONS DATA
Operating revenues..... $ 2,073 $ 915 $1,230 $ 648 $1,091 $ 891 $663
Operating income....... 432 141 133 49 377 299 163
Net income............. 197 118 109 58 342 260 148
Earnings per share
Basic................ 0.64 0.56 0.52 0.53(a) 3.12(a) 2.38(a) 1.35(a)
Diluted.............. 0.63 0.56 0.51 0.53(a) 3.12(a) 2.38(a) 1.35(a)
OTHER FINANCIAL DATA
Cash flows from
operating
activities........... $ 366 $ 182 $ 197 $ 241 $ 473 $ 318 $236
Capital expenditures... 443 466 575 537 425 187 151
EBITDA(b).............. 904 343 401 186 508 420 272
BALANCE SHEET DATA (UNAUDITED)
Total assets........... $16,868 $6,264 $6,359 $6,140 $1,473 $1,051 $899
Total debt............. 4,781 1,355 1,453 1,266 100 160 53
Equity................. 10,859 4,018 4,004 3,910 564 363 462
4
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2001 DECEMBER 31, 2000
------------------ -----------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS DATA
Operating revenues................................... $ 2,198 $2,292
Operating income..................................... 432 130
Income (loss) from continuing operations before
extraordinary items................................ [200] (94)
Income (loss) from continuing operations before
extraordinary items applicable to ordinary
shareholders....................................... [200] (301)
Basic income (loss) from continuing operations before
extraordinary items per share applicable to
ordinary shareholders.............................. 0.63 (0.95)
Diluted income (loss) from continuing operations
before extraordinary items per share applicable to
ordinary shareholders.............................. 0.62 (0.95)
PRO FORMA CONSOLIDATED BALANCE SHEET DATA AS OF
SEPTEMBER 30, 2001
Total assets......................................... $[16,868]
Total debt........................................... 4,781
Equity............................................... [10,859]
---------------
(a) Unaudited pro forma earnings per share for the years ended December 31, 1996
through 1999 was calculated using the Transocean Sedco Forex Inc. ordinary
shares issued pursuant to the Sedco Forex merger agreement and the dilutive
effect of Transocean Sedco Forex Inc. stock options granted to former Sedco
Forex employees at the time of the Sedco Forex merger, as applicable.
(b) EBITDA (earnings before interest, taxes, depreciation and amortization) is
presented here because it is a widely accepted financial indication of a
company's ability to incur and service debt. EBITDA measures presented may
not be comparable to similarly titled measures used by other companies.
EBITDA is not a measurement presented in accordance with accounting
principles generally accepted in the United States ("GAAP") and is not
intended to be used in lieu of GAAP presentations of results of operations
and cash provided by operating activities.
Amounts in brackets above to be revised in an amendment to this registration
statement.
5
R&B FALCON CORPORATION SELECTED HISTORICAL
CONSOLIDATED FINANCIAL DATA
R&B Falcon prepared the selected historical consolidated financial data in
the table below using the consolidated financial statements of R&B Falcon. R&B
Falcon derived the statement of operations data below for each of the five years
in the period ended December 31, 2000, and the consolidated balance sheet data
as of December 31 of each year from 1996 to 2000, from its financial statements
audited by Arthur Andersen LLP, independent public accountants. R&B Falcon
derived the consolidated statement of operations data for the nine months ended
September 30, 2001 and 2000 and the consolidated balance sheet data as of
September 30, 2001 and 2000 from its unaudited consolidated financial statements
which, in the opinion of management, include all adjustments, consisting only of
normal recurring adjustments, necessary for a fair statement of the results for
the unaudited interim periods. Operating results for the nine months ended
September 30, 2001 are not necessarily indicative of the results that may be
expected for the entire year ending December 31, 2001.
On January 31, 2001, Transocean Sedco Forex completed a merger transaction
with R&B Falcon. As a result of the merger, R&B Falcon became a wholly owned
subsidiary of Transocean Sedco Forex. The merger was accounted for as a purchase
and Transocean Sedco Forex was the accounting acquiror. The purchase price was
allocated to the assets and liabilities of R&B Falcon based on their estimated
fair values on the date of the merger. Accordingly, the financial statements of
R&B Falcon for periods subsequent to January 31, 2001 are not comparable to
those of prior periods in material respects since those financial statements
report financial position, results of operations and cash flows using a
different basis of accounting.
The pro forma statement of operations data below for the nine months ended
September 30, 2001 and for the year ended December 31, 2000 assumes the merger
transaction with Transocean Sedco Forex and the sale of drilling units described
in "Certain Related Transactions" were completed on January 1, 2000. The pro
forma consolidated statement of operations data also assumes the exchange offers
were completed as of January 1, 2000 and that all R&B Falcon notes were tendered
by the applicable consent payment deadline and not withdrawn.
The unaudited consolidated statement of operations data for the eight
months ended September 30, 2001, one month ended January 31, 2001 and nine
months ended September 30, 2000 contain certain reclassifications to conform the
presentation of operating results with that of Transocean Sedco Forex. These
reclassifications were not made in the annual periods 2000 and prior. None of
the reclassifications had an effect on the consolidated net loss from continuing
operations.
POST-
ACQUISITION PRE-ACQUISITION
------------- ---------------------------
EIGHT MONTHS ONE MONTH NINE MONTHS
ENDED ENDED ENDED
SEPTEMBER 30, JANUARY 31, SEPTEMBER 30,
2001 2001 2000
------------- ----------- -------------
(IN MILLIONS, EXCEPT RATIOS AND
PER SHARE AMOUNTS)
(UNAUDITED) (UNAUDITED)
HISTORICAL STATEMENT OF
OPERATIONS DATA
Operating revenues............. $ 925.0 $128.6 $ 757.1
Income (loss) from continuing
operations before
extraordinary items........... (55.7) (91.9) (47.3)
Income (loss) from continuing
operations before
extraordinary items and after
preferred share dividends per
common share:
Basic(d)...................... -- -- (0.45)
Diluted(d).................... -- -- (0.45)
PRE-ACQUISITION
----------------------------------------------------------
YEARS ENDED DECEMBER 31,
----------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
HISTORICAL STATEMENT OF
OPERATIONS DATA
Operating revenues............. $1,052.1 $ 925.7 $1,033.5 $ 933.0 $ 609.6
Income (loss) from continuing
operations before
extraordinary items........... (58.0) (67.8)(a) 91.0(b) 29.8(c) 106.7
Income (loss) from continuing
operations before
extraordinary items and after
preferred share dividends per
common share:
Basic(d)...................... (1.35) (0.53) 0.54 0.18 0.70
Diluted(d).................... (1.35) (0.53) 0.54 0.18 0.67
6
POST-
ACQUISITION PRE-ACQUISITION
------------- ---------------------------
EIGHT MONTHS ONE MONTH NINE MONTHS
ENDED ENDED ENDED
SEPTEMBER 30, JANUARY 31, SEPTEMBER 30,
2001 2001 2000
------------- ----------- -------------
(IN MILLIONS, EXCEPT RATIOS AND
PER SHARE AMOUNTS)
(UNAUDITED) (UNAUDITED)
OTHER FINANCIAL DATA
Cash flow from operating
activities.................... $ 211.1 $(35.7) $ (91.8)
Capital expenditures........... 200.3 16.5 419.1
EBITDA(e)...................... 334.6 (87.5) 234.7
BALANCE SHEET DATA
Total assets................... $9,012.0 $ 4,841.7
Long-term obligations
(including current portion)
and redeemable preferred
shares........................ 1,769.8 3,694.6
Total Shareholders' Equity..... 6,582.8 1,147.2
Dividends on common shares..... -- --
PRE-ACQUISITION
----------------------------------------------------------
YEARS ENDED DECEMBER 31,
----------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
OTHER FINANCIAL DATA
Cash flow from operating
activities.................... $ (99.3) $ 198.6 $ 247.9 $ 330.1 $ 167.6
Capital expenditures........... 476.1 839.7 1,188.3 690.3 383.2
EBITDA(e)...................... 400.5 205.4 313.5 244.1 240.1
BALANCE SHEET DATA
Total assets................... $4,795.2 $4,924.3 $3,714.0 $2,011.4 $1,455.8
Long-term obligations
(including current portion)
and redeemable preferred
shares........................ 2,933.2 3,229.5 1,872.5 827.4 514.2
Total Shareholders' Equity..... 1,375.5 1,204.4 1,250.2 728.0 716.7
Dividends on common shares..... -- -- -- -- --
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
2001 2000
--------------- --------------
(IN MILLIONS, EXCEPT RATIOS AND
PER SHARE AMOUNTS)
(UNAUDITED)
Amounts in brackets below to be revised in an amendment to
this registration statement.
PRO FORMA STATEMENT OF OPERATIONS DATA
Operating revenues.......................................... $1,050.9 $1,062.9
Loss from continuing operations before extraordinary
items...................................................... [91.1] [197.5]
Loss from continuing operations before extraordinary items
applicable to common shareholders.......................... [91.1] [404.3]
PRO FORMA CONSOLIDATED BALANCE SHEET DATA AS OF SEPTEMBER
30, 2001
Total assets................................................ $9,012.0
Total debt.................................................. 1,769.8
Equity...................................................... 6,582.8
---------------
(a) Included in 1999 are expenses of $34.7 million in connection with the
cancellation of certain drillship projects and $3.7 million of oil and
gas development expenses.
(b) Included in 1998 are expenses of $118.3 million in connection with the
cancellation of certain drillship projects, $19.5 million of oil and gas
development expenses and the reversal of $8.0 million of expenses in
connection with the merger of Reading & Bates Corporation and Falcon
Drilling Co. in December 1997, which was accounted for as a pooling of
interests.
(c) Included in 1997 are expenses of $66.4 million in connection with the
merger of Reading & Bates Corporation and Falcon Drilling Co. in
December 1997, which was accounted for as a pooling of interests.
Additionally, R&B Falcon incurred oil and gas development expenses and
charges of $130.2 million in 1997.
(d) Effective with the merger with Transocean Sedco Forex on January 31,
2001, R&B Falcon became a wholly owned subsidiary of Transocean Sedco
Forex. In conjunction with the merger, the R&B Falcon common
shareholders received .5 newly issued Transocean Sedco Forex ordinary
shares for each R&B Falcon share. As a result, no earnings per share
information is shown for post-merger financial information.
(e) EBITDA (income (loss) from continuing operations before extraordinary
items and minority interest, interest, net, taxes, depreciation and
amortization) is presented here because it is a widely accepted
financial indication of a company's ability to incur and service debt.
EBITDA measures presented may not be comparable to similarly titled
measures used by other companies. EBITDA is not a measurement presented
in accordance with accounting principles generally accepted in the
United States ("GAAP") and is not intended to be used in lieu of GAAP
presentations of results of operations and cash provided by operating
activities.
7
QUESTIONS AND ANSWERS ABOUT THE EXCHANGE OFFERS
AND CONSENT SOLICITATIONS
Q: WHY IS TRANSOCEAN SEDCO FOREX MAKING THE EXCHANGE OFFERS AND THE CONSENT
SOLICITATIONS?
A: As a result of the merger on January 31, 2001, R&B Falcon became an
indirect wholly owned subsidiary of Transocean Sedco Forex. Since the
merger, Transocean Sedco Forex has been operationally and financially
integrating R&B Falcon into the Transocean Sedco Forex organization. See
"Certain Related Transactions" for a description of some of these
integration transactions. The exchange offers and the proposed amendments
are intended to provide us with greater operational and financial
flexibility, including greater flexibility in continuing our integration
efforts, and to allow us to structure our operations and the operations of
our subsidiaries in a more efficient manner and allow for potential
savings.
Q: WHAT WILL I RECEIVE IN THE EXCHANGE OFFERS AND CONSENT SOLICITATIONS?
A: For each $1,000 principal amount of any series of R&B Falcon notes validly
tendered and accepted for exchange, Transocean Sedco Forex is offering
$1,000 principal amount of Transocean Sedco Forex's newly issued notes of a
corresponding series. Each series of Transocean Sedco Forex notes being
offered under this prospectus and consent solicitation statement will have
the same principal amount, interest rate, redemption terms and payment and
maturity dates as those of the corresponding series of R&B Falcon notes to
be exchanged in the exchange offers, and will be issued under and governed
by the terms of the indenture under which Transocean Sedco Forex's existing
debt securities were issued. Instead of receiving a payment for accrued
interest on R&B Falcon notes you exchange, the Transocean Sedco Forex notes
you receive in exchange for those R&B Falcon notes will accrue interest
from the last date to which interest has been paid on those R&B Falcon
notes.
In addition, R&B Falcon will pay an amount in cash equal to the applicable
consent payment listed on the cover page of this prospectus and consent
solicitation statement to each holder of R&B Falcon notes accepted for
exchange if the holder has tendered those notes prior to the applicable
consent payment deadline. The consent payment deadline for each exchange
offer (that is, the time by which holders must tender R&B Falcon notes into
that offer in order to be eligible to receive the consent payment) will be
5:00 p.m., New York City time, on , 2002, unless extended.
AS A HOLDER OF R&B FALCON NOTES OF ANY SERIES, YOU MAY GIVE YOUR CONSENT TO
THE PROPOSED AMENDMENTS TO THE R&B FALCON INDENTURES ONLY BY TENDERING YOUR
R&B FALCON NOTES IN THE EXCHANGE OFFER FOR THAT SERIES. BY SO TENDERING,
YOU WILL BE DEEMED TO HAVE GIVEN A CONSENT WITH RESPECT TO THE NOTES OF
THAT SERIES.
Q: WHAT ARE THE CONSEQUENCES OF NOT TENDERING IN THE EXCHANGE OFFERS?
A: If the exchange offers are consummated and the proposed amendments to the
R&B Falcon indentures have been adopted, they will apply to all R&B Falcon
notes not acquired in the exchange offers. All R&B Falcon notes that remain
outstanding after the consummation of the exchange offers will be governed
by the R&B Falcon indentures as amended by the proposed amendments, which
will have less restrictive terms and afford reduced protections to the
holders of such securities compared to those currently in the R&B Falcon
indentures. See "Risk Factors -- Risk Factors Relating to the Exchange
Offers and Consent Solicitations -- The proposed amendments to the R&B
Falcon indentures will afford reduced protection to holders of R&B Falcon's
notes." In addition, holders that do not tender in the exchange offers
prior to the consent payment deadline will not receive the applicable
consent payment, even though the proposed amendments will become effective
with respect to their R&B Falcon notes.
8
Q: HOW DO THE R&B FALCON NOTES DIFFER FROM THE TRANSOCEAN SEDCO FOREX NOTES TO
BE ISSUED IN THE EXCHANGE OFFERS?
A: The R&B Falcon notes are the obligations solely of R&B Falcon and are
governed by the R&B Falcon indentures, while the Transocean Sedco Forex
notes will be the obligations solely of Transocean Sedco Forex and will be
governed by the Transocean Sedco Forex indenture. The R&B Falcon indentures
and the Transocean Sedco Forex indenture differ in certain respects,
including as follows:
- The indenture for the R&B Falcon 9.125% notes and R&B Falcon 9.50% notes
restricts R&B Falcon's ability to incur debt and to make distributions
and other "restricted" payments, although these covenants are suspended
during the time that such notes have investment grade ratings.
- The R&B Falcon indentures restrict R&B Falcon's ability to merge or
consolidate with, or sell substantially all of its assets to, a non-U.S.
entity.
- The provisions of the R&B Falcon indentures limiting the ability of R&B
Falcon and its subsidiaries to incur liens are more restrictive than the
corresponding provisions of the Transocean Sedco Forex indenture.
These provisions will be eliminated from the R&B Falcon indentures,
however, if the proposed amendments are adopted.
See "Description of Differences Between the R&B Falcon Notes and the
Transocean Sedco Forex Notes" and "Description of the Transocean Sedco
Forex Notes."
The Transocean Sedco Forex notes offered will be structurally subordinated
to all obligations of Transocean Sedco Forex's subsidiaries, including any
R&B Falcon debt securities not properly tendered and accepted for payment
in the exchange offers, with respect to the assets of such subsidiaries. As
of December 31, 2001, the aggregate amount of outstanding long-term debt of
Transocean Sedco Forex's subsidiaries to which holders of the Transocean
Sedco Forex notes would have been structurally subordinated was
approximately $1,783.9 million, of which $1,537.9 million represented the
carrying value of the six series of R&B Falcon notes for which Transocean
Sedco Forex is making the exchange offers. See "Risk Factors -- Risks
Relating to the Exchange Offers and Consent Solicitations -- Our holding
company structure results in substantial structural subordination and may
affect our ability to make payments on the Transocean Sedco Forex notes"
and "Description of the Transocean Sedco Forex Notes -- Ranking; Additional
Debt."
Q: WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO HOLDERS THAT TENDER
R&B FALCON NOTES IN THE EXCHANGE OFFERS?
A: The receipt of Transocean Sedco Forex notes and consent payments in
connection with the exchange offers and consent solicitations will be a
taxable transaction for U.S. federal income tax purposes, and holders of
R&B Falcon notes properly tendered (and not validly withdrawn) in the
exchange offers will, accordingly, recognize gain or loss, as described in
the section of the prospectus and consent solicitation statement entitled
"Material U.S. Federal Income Tax Consequences."
Q: WHAT CONSENTS ARE REQUIRED TO EFFECT THE PROPOSED AMENDMENTS TO THE R&B
FALCON INDENTURES AND CONSUMMATE THE EXCHANGE OFFERS?
A: Consents from holders of record of a majority of the total outstanding
principal amount of a particular series of R&B Falcon notes as of the close
of business on , 2002 must be received in order to amend the R&B
Falcon indenture with respect to that series.
Transocean Sedco Forex's obligation to complete each exchange offer and
cause R&B Falcon to make the consent payments relating to that exchange
offer is conditioned upon, among other things, receipt of valid consents
sufficient to effect the amendments with respect to all six series of R&B
Falcon notes, although Transocean Sedco Forex will be free
9
to waive this or any other condition with respect to any or all of the
exchange offers. For information about other conditions to Transocean Sedco
Forex's obligation to complete the exchange offers and cause R&B Falcon to
make the consent payments, see "Conditions to the Exchange Offers and
Consent Solicitations."
Q: WILL TRANSOCEAN SEDCO FOREX ACCEPT ALL TENDERS OF R&B FALCON NOTES?
A: Subject to the satisfaction or waiver of the conditions to each exchange
offer, Transocean Sedco Forex will accept for exchange any and all R&B
Falcon notes of a series properly tendered (and not validly withdrawn) in
the applicable exchange offer on or before the expiration date of that
exchange offer.
Q: WHEN WILL TRANSOCEAN SEDCO FOREX ISSUE NEW NOTES AND CAUSE CONSENT PAYMENTS
TO BE MADE IN EXCHANGE FOR R&B FALCON NOTES?
A: Assuming the conditions to the exchange offers are satisfied or waived,
Transocean Sedco Forex will issue new notes in book-entry form and cause
R&B Falcon to make consent payments in exchange for R&B Falcon notes on the
third business day following the expiration date of the applicable exchange
offer or as soon as practicable after that date.
Q: WHEN DO I NEED TO TENDER MY R&B FALCON NOTES TO RECEIVE THE APPLICABLE
CONSENT PAYMENT?
A: The consent payment deadline for each exchange offer is 5:00 p.m., New York
City time on , 2002, unless extended. The consent
payment deadline is the latest date and time on which you may tender your
R&B Falcon notes and receive the applicable consent payment if these notes
are exchanged.
Q: WHEN DO THE EXCHANGE OFFERS EXPIRE?
A: The exchange offers will expire at 5:00 p.m., New York City time, on
, 2002, unless Transocean Sedco Forex, in its sole
discretion, extends the exchange offers (or any of them) in which case the
expiration date with respect to an exchange offer will be the latest date
and time to which such exchange offer is extended. See "The Exchange
Offers -- Consent Payment Deadline; Expiration Date; Extensions;
Amendments."
Q: WHAT ARE MY RIGHTS IF I CHANGE MY MIND AFTER I TENDER MY R&B FALCON NOTES?
A: You may withdraw your tender at any time before the applicable exchange
offer expires. A valid withdrawal of tendered R&B Falcon notes prior to the
applicable consent payment deadline will constitute the revocation of the
related consent to the proposed amendments to the applicable R&B Falcon
indenture. You may only revoke a consent by validly withdrawing the related
R&B Falcon notes prior to the consent payment deadline. See "The Exchange
Offers -- Withdrawal of Tenders and Revocation of Corresponding Consents."
Q: HOW DO I EXCHANGE MY R&B FALCON NOTES IF I AM A BENEFICIAL OWNER OF R&B
FALCON NOTES HELD OF RECORD BY A CUSTODIAN BANK, DEPOSITARY, BROKER, TRUST
COMPANY OR OTHER NOMINEE? WILL THE RECORD HOLDER EXCHANGE MY R&B FALCON
NOTES FOR ME?
A: If your R&B Falcon notes are held by a custodian bank, depositary, broker,
trust company or other nominee and you wish to tender the securities in the
exchange offers, you should contact that institution promptly and instruct
the institution to tender on your behalf. The record holder will tender
your securities on your behalf, but only if you instruct the record holder
to do so. See "The Exchange Offers -- Procedures for Tendering -- Tender of
R&B Falcon Notes Held through a Nominee."
Q: DO I HAVE THE RIGHT TO DISSENT FROM THE EXCHANGE OFFERS OR SEEK APPRAISAL
OF THE R&B FALCON NOTES I HOLD?
A: Holders of R&B Falcon notes do not have any appraisal or dissenters' rights
under New York law, the law governing the R&B Falcon indentures, or under
the terms of the R&B Falcon indentures in connection with the exchange
offers and consent solicitations.
10
Q: TO WHOM SHOULD I DIRECT ANY QUESTIONS?
A: Questions concerning the terms of the exchange offers or the consent
solicitations should be directed to the dealer managers. Questions
concerning tender procedures and requests for additional copies of this
prospectus and consent solicitation statement should be directed to the
information agent. The addresses and telephone numbers of the dealer
managers and the information agent are set forth on the back cover page of
this prospectus and consent solicitation statement.
11
TRANSOCEAN SEDCO FOREX
RATIO OF EARNINGS TO FIXED CHARGES
Transocean Sedco Forex's ratio of earnings to fixed charges for each of the
periods shown is as follows:
NINE MONTHS
ENDED YEARS ENDED DECEMBER 31,
SEPTEMBER 30, --------------------------------------------
2001 2000 1999(A) 1998(A) 1997(A) 1996(A)
------------- ---- ------- ------- ------- -------
Historical ratio of earnings to fixed
charges............................... 2.1 1.5 1.4 9.7 10.3 12.6
Historical ratio of earnings to fixed
charges as adjusted for pro forma
effect of the merger(b)............... 2.0 --
---------------
(a) The ratios for each of the years in the four year period ended December 31,
1999 include only the earnings and fixed charges of Sedco Forex and not
those of Transocean Offshore Inc.
(b) Historical ratio of earnings to fixed charges as adjusted for the pro forma
effect of the merger were insufficient to cover fixed charges by $131.1
million for the year ended December 31, 2000.
We have computed the ratios of earnings to fixed charges shown above by
dividing earnings available for fixed charges by fixed charges. For this
purpose, "earnings available for fixed charges" consist of pretax income (loss)
from continuing operations before extraordinary items plus fixed charges,
distributed earnings of unconsolidated joint ventures and amortization of
capitalized interest, less capitalized interest and undistributed equity in
earnings of unconsolidated joint ventures. "Fixed charges" consist of interest
expense, capitalized interest and an estimate of the interest within rental
expense.
On January 31, 2001, we completed our merger transaction with R&B Falcon.
The merger was accounted for as a purchase, with our company as the acquiror for
accounting purposes. The historical ratios of earnings to fixed charges for the
year ended December 31, 2000 include only the earnings and fixed charges of
Transocean Sedco Forex.
Historical ratio of earnings to fixed charges as adjusted for the pro forma
effect of the merger for the year ended December 31, 2000 and the nine months
ended September 30, 2001 assume that we completed the merger transaction with
R&B Falcon on January 1, 2000. This pro forma information does not necessarily
reflect what the ratio of earnings to fixed charges would have been if the
merger had been completed on that date nor does it necessarily reflect any
future ratio of earnings to fixed charges.
The pro forma effect of this exchange offer is not included or required
since it has an insignificant (less than 10 percent) effect on the historical
ratios.
12
R&B FALCON RATIO OF EARNINGS TO FIXED CHARGES
For purposes of computing the ratio of earnings to fixed charges, "earnings
available for fixed charges" consist of pretax income (loss) from continuing
operations before extraordinary items and minority interest plus fixed charges,
distributed earnings of unconsolidated joint ventures and amortization of
capitalized interest, less capitalized interest and undistributed equity in
earnings of unconsolidated joint ventures and minority interest in pre-tax
income of subsidiaries that have not incurred fixed charges. "Fixed charges"
consist of interest expense, capitalized interest and an estimate of the
interest within rental expense.
The following table sets forth our consolidated ratio of earnings to fixed
charges for the periods shown:
POST-
ACQUISITION PRE-ACQUISITION
------------- -------------------------------------------------
EIGHT MONTHS ONE MONTH
ENDED ENDED YEARS ENDED DECEMBER 31,
SEPTEMBER 30, JANUARY 31, ----------------------------------
2001 2001 2000 1999 1998 1997 1996
------------- ----------- ---- ---- ---- ---- ----
Ratio of earnings to
fixed charges(a)....... -- -- -- -- 1.9 2.6 3.4
POST-ACQUISITION
----------------------------
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
2001 2000
------------- ------------
Historical ratio of
earnings to fixed
charges as adjusted for
pro forma(b)........... -- --
---------------
(a) For the eight months ended September 30, 2001, the one month ended January
31, 2001 and for the years ended December 31, 2000 and 1999, earnings were
insufficient to cover fixed charges by $31.1 million, $127.3 million, $44.3
million and $185.0 million, respectively.
(b) Historical ratio of earnings to fixed charges as adjusted for pro forma
effect of the merger were insufficient to cover fixed charges by $80.7
million and $189.3 million for the nine months ended September 30, 2001 and
for the year ended December 31, 2000, respectively.
On January 31, 2001, we completed our merger transaction with Transocean
Sedco Forex. The merger was accounted for as a purchase, with Transocean Sedco
Forex as the acquiror for accounting purposes. The historical ratios of earnings
to fixed charges for the five years ended December 31, 2000 and the one month
ended January 31, 2001 include the earnings and fixed charges for R&B Falcon
prior to the merger.
The historical ratio of earnings to fixed charges as adjusted for pro forma
effect of the merger for the year ended December 31, 2000 and the nine months
ended September 30, 2001 assume that we completed the merger transaction with
Transocean Sedco Forex and the rig sales on January 1, 2000. This pro forma
information does not necessarily reflect what the ratio of earnings to fixed
charges would have been if the merger had been completed on that date nor does
it necessarily reflect any future ratio of earnings to fixed charges.
The pro forma effect of this exchange offer is not included or required
since it has an insignificant (less than 10 percent) effect on the historical
ratios.
13
RISK FACTORS
In addition to the other information contained in this prospectus and
consent solicitation statement and the documents incorporated by reference, you
should carefully consider the following risk factors.
RISK FACTORS RELATING TO THE EXCHANGE OFFERS AND CONSENT SOLICITATIONS
THE PROPOSED AMENDMENTS TO THE R&B FALCON INDENTURES WILL AFFORD REDUCED
PROTECTION TO REMAINING HOLDERS OF R&B FALCON NOTES.
If the proposed amendments to the R&B Falcon indentures are adopted, the
covenants and some other terms of the R&B Falcon notes will be less restrictive
and will afford reduced protection to holders of such securities compared to the
covenants and other provisions currently contained in the R&B Falcon indentures.
The proposed amendments to the R&B Falcon indentures would, among other things:
- eliminate the covenants that restrict the ability of R&B Falcon and some
of its subsidiaries to incur, issue, assume or guarantee indebtedness, if
that indebtedness is secured by principal properties or securities of
such subsidiaries, or enter into sale and leaseback transactions,
- eliminate the covenants in the R&B Falcon 9.125% - 9.50% notes indenture
that limit the ability of R&B Falcon to incur indebtedness and to make
dividends and distributions (which covenants are currently suspended
because R&B Falcon has an investment grade debt rating),
- eliminate some requirements that must be met for R&B Falcon to
consolidate, merge or sell all or substantially all of its assets,
- eliminate some events from the definition of an "event of default" under
the R&B Falcon notes indentures,
- eliminate the covenant requiring R&B Falcon to prepare and file separate
financial reports, and
- eliminate the covenants requiring R&B Falcon to maintain its properties
in good condition and repair, and to pay or discharge all material taxes,
assessments and governmental charges and all claims which otherwise might
become a material lien on the property of R&B Falcon or certain of its
subsidiaries.
If the proposed amendments are adopted with respect to the R&B Falcon
notes, each non-exchanging holder of R&B Falcon notes will be bound by the
proposed amendments even if that holder did not consent to the proposed
amendments. The elimination or modification of the covenants and other
provisions in the R&B Falcon indentures contemplated by the proposed amendments
would, among other things, permit Transocean Sedco Forex, R&B Falcon and their
respective subsidiaries to take actions that could increase the credit risk with
respect to R&B Falcon, and might adversely affect the liquidity, market price
and price volatility of the R&B Falcon notes or otherwise be adverse to the
interests of the holders of the R&B Falcon notes. See "The Proposed Amendments."
THE LIQUIDITY OF THE R&B FALCON NOTES THAT ARE NOT EXCHANGED WILL BE REDUCED.
The current trading market for the R&B Falcon notes is limited. The trading
market for unexchanged R&B Falcon notes will become more limited and could cease
to exist due to the reduction in the amount of the R&B Falcon notes outstanding
upon consummation of the exchange offers. A more limited trading market might
adversely affect the liquidity, market price and price volatility of these
securities. If a market for unexchanged R&B Falcon notes exists or
14
develops, these securities may trade at a discount to the price at which the
securities would trade if the amount outstanding were not reduced, depending on
prevailing interest rates, the market for similar securities and other factors.
However, there can be no assurance that an active market in the unexchanged R&B
Falcon notes will exist, develop or be maintained or as to the prices at which
the unexchanged R&B Falcon notes may be traded.
OUR HOLDING COMPANY STRUCTURE RESULTS IN STRUCTURAL SUBORDINATION AND MAY
AFFECT OUR ABILITY TO MAKE PAYMENTS ON THE TRANSOCEAN SEDCO FOREX NOTES.
The Transocean Sedco Forex notes are obligations exclusively of Transocean
Sedco Forex. We are a holding company and, accordingly, substantially all of our
operations are conducted through our subsidiaries. As a result, our cash flow
and our ability to service our debt, including the notes to be issued in the
exchange offers, is dependent upon the earnings of our subsidiaries and on the
distribution of earnings, loans or other payments by our subsidiaries to us. The
Transocean Sedco Forex notes offered will be structurally subordinated to all
obligations of Transocean Sedco Forex's subsidiaries, including any R&B Falcon
notes not properly tendered and accepted for payment in the exchange offers,
with respect to the assets of such subsidiaries. As of December 31, 2001, the
aggregate amount of outstanding long-term debt of Transocean Sedco Forex's
subsidiaries to which holders of the Transocean Sedco Forex notes would have
been structurally subordinated was approximately $1,783.9 million, of which
$1,537.9 million represented the carrying value of the six series of R&B Falcon
notes for which Transocean Sedco Forex is making the exchange offers. See
"Description of the Transocean Sedco Forex Notes -- Ranking; Additional Debt."
A PUBLIC MARKET DOES NOT CURRENTLY EXIST FOR THE TRANSOCEAN SEDCO FOREX NOTES
OFFERED IN THE EXCHANGE OFFERS, AND A MARKET MAY NOT DEVELOP OR BE SUSTAINED.
Transocean Sedco Forex does not plan to list the Transocean Sedco Forex
notes offered under this prospectus and consent solicitation statement on any
national securities exchange or on The Nasdaq Stock Market. Although the R&B
Falcon notes are not so listed, there currently exists a limited trading market
for the R&B Falcon notes. The Transocean Sedco Forex notes will represent new
securities for which no such market currently exists. Although a market exists
for currently outstanding debt securities of Transocean Sedco Forex, there can
be no assurance that an active trading market for the Transocean Sedco Forex
notes offered under this prospectus and consent solicitation statement will
develop or, if such a market develops, that it will be liquid or sustainable.
A RATINGS DECLINE COULD ADVERSELY AFFECT THE VALUE OF THE NOTES.
Any of the agencies that rate our debt have the ability to lower the
ratings currently assigned to our debt, as a result of their views about our
current or future business, financial condition or results of operations. Any
ratings decline could adversely affect the value of the Transocean Sedco Forex
notes offered under this prospectus and consent solicitation statement.
RISK FACTORS RELATING TO THE BUSINESS OF TRANSOCEAN SEDCO FOREX
If any of the following risks occur, our business, financial condition or
results of operations could be materially adversely affected.
OUR BUSINESS DEPENDS ON THE LEVEL OF ACTIVITY IN THE OIL AND GAS INDUSTRY,
WHICH IS SIGNIFICANTLY AFFECTED BY OIL AND GAS PRICES, WHICH ARE OFTEN
VOLATILE.
Our business depends on the level of activity in oil and gas exploration,
development and production in markets worldwide, with the U.S. and international
offshore and U.S. inland marine areas being our primary markets. Oil and gas
prices and market expectations of potential changes in these prices
significantly affect this level of activity. Worldwide military, political and
15
economic events have contributed to oil and gas price volatility and are likely
to do so in the future. Oil and gas prices are extremely volatile and are
affected by numerous factors, including the following:
- worldwide demand for oil and gas,
- the ability of the Organization of Petroleum Exporting Countries,
commonly called "OPEC," to set and maintain production levels and
pricing,
- the level of production in non-OPEC countries,
- the policies of various governments regarding exploration and development
of their oil and gas reserves,
- advances in exploration and development technology, and
- the worldwide military and political environment, including uncertainty
or instability resulting from an escalation or additional outbreak of
armed hostilities or other crisis in the Middle East or other geographic
areas in which we operate or further acts of terrorism in the United
States, or elsewhere.
OUR INDUSTRY IS HIGHLY COMPETITIVE AND CYCLICAL, WITH INTENSE PRICE
COMPETITION AND PERIODS OF LOW DEMAND AND EXCESS RIG AVAILABILITY.
The offshore and inland marine contract drilling industry is highly
competitive with numerous industry participants, none of which has a dominant
market share. Drilling contracts are traditionally awarded on a competitive bid
basis. Intense price competition is often the primary factor in determining
which qualified contractor is awarded a job, although rig availability and the
quality and technical capability of service and equipment may also be
considered. Recent mergers among oil and natural gas exploration and production
companies have reduced the number of available customers.
Our industry has historically been cyclical and may be impacted by oil and
gas price levels and volatility. There have been periods of high demand, short
rig supply and high dayrates, followed by periods of low demand, excess rig
supply and low dayrates. Changes in commodity prices can have a dramatic effect
on rig demand, and periods of excess rig supply intensify the competition in the
industry and often result in rigs being idle for long periods of time. We may be
required to idle rigs or to enter into lower rate contracts in response to
market conditions in the future.
THE LEVEL OF ACTIVITY IN THE OIL AND GAS INDUSTRY IS CURRENTLY RELATIVELY LOW
IN MOST OF OUR MARKETS, WHICH ADVERSELY AFFECTS OUR DAYRATES AND RIG
UTILIZATION.
Decreases in U.S. natural gas prices since the beginning of the second
quarter 2001 led to a decline in our Gulf of Mexico shallow and inland water
segment utilization and dayrates and these conditions could continue or worsen.
In addition, reduced exploration and development spending by our customers in
response to lower oil and gas prices and consolidation activity among major oil
producers has resulted in lower utilization and dayrates for our drilling rigs.
Current market conditions have resulted in surplus rig capacity, particularly in
the lower specification semisubmersible and some jackup markets. We currently
believe that demand in early 2002 will generally decline for midwater rigs in
the Gulf of Mexico and North Sea markets and for jackup rigs in the Gulf of
Mexico market. If oil or gas prices remain at current levels or decline, demand
for our drilling services could be further reduced, which would adversely affect
both utilization and dayrates.
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OUR DRILLING CONTRACTS MAY BE TERMINATED OR SUSPENDED DUE TO A NUMBER OF
EVENTS.
Our customers may terminate or suspend some of our term drilling contracts
under various circumstances such as the loss or destruction of the drilling unit
or as a result of equipment problems. Some drilling contracts permit the
customer to terminate the contract at the customer's option without paying a
termination fee. Suspension of drilling contracts results in loss of the dayrate
for the period of the suspension. If our customers cancel some of our
significant contracts and we are unable to secure new contracts on substantially
similar terms, it could adversely affect our results of operations. In reaction
to depressed market conditions, our customers may also seek renegotiation of
firm drilling contracts to reduce their obligations.
WE MAY FACE DIFFICULTIES IN INTEGRATING OUR COMBINED OPERATIONS.
We have been involved in two merger transactions in the last three years.
We may not be able to integrate the operations of the merged or acquired
companies without a loss of employees, customers or suppliers, a loss of
revenues, an increase in operating or other costs or other difficulties. In
addition, we may not be able to realize the operating efficiencies, synergies,
cost savings or other benefits expected from these transactions.
We plan to continue our restructuring of the ownership of a portion of the
assets held by R&B Falcon and its subsidiaries at the time of our merger. This
restructuring is intended to achieve operational efficiencies, including
improved worldwide cash management and increased flexibility for operating rigs
in various jurisdictions, and allow for potential tax and other savings. Any
transfers of assets by R&B Falcon or one of its subsidiaries to Transocean Sedco
Forex or one of its other subsidiaries in this restructuring could, in some
cases, result in the imposition of additional taxes.
OUR BUSINESS INVOLVES NUMEROUS OPERATING HAZARDS AND IT WILL NOT BE FULLY
INSURED AGAINST ALL OF THEM.
Our operations are subject to the usual hazards inherent in the drilling of
oil and gas wells, such as blowouts, reservoir damage, loss of production, loss
of well control, punchthroughs, craterings and fires. The occurrence of these
events could result in the suspension of drilling operations, damage to or
destruction of the equipment involved and injury or death to rig personnel. We
may also be subject to personal injury and other claims of rig personnel as a
result of our drilling operations. Operations also may be suspended because of
machinery breakdowns, abnormal drilling conditions, failure of subcontractors to
perform or supply goods or services or personnel shortages. In addition,
offshore drilling operators are subject to perils peculiar to marine operations,
including capsizing, grounding, collision and loss or damage from severe
weather. Damage to the environment could also result from our operations,
particularly through oil spillage or extensive uncontrolled fires. We may also
be subject to property, environmental and other damage claims by oil and gas
companies. Our insurance policies and contractual rights to indemnity may not
adequately cover losses, and we may not have insurance coverage or rights to
indemnity for all risks.
If a significant accident or other event, including terrorist acts, war,
civil disturbances, pollution or environmental damage, occurs and is not fully
covered by insurance or a recoverable indemnity from a client, it could
adversely affect our consolidated financial position or results of operations.
Moreover, no assurance can be made that we will be able to maintain adequate
insurance in the future at rates we consider reasonable or be able to obtain
insurance against certain risks, particularly in light of the instability and
developments in the insurance markets following the recent terrorist attacks.
See "-- Recent terrorist attacks and United States military action could result
in a material adverse effect on our business" for further details.
17
OUR NON-U.S. OPERATIONS WILL INVOLVE ADDITIONAL RISKS NOT ASSOCIATED WITH OUR
U.S. OPERATIONS.
We operate in various regions throughout the world that may expose us to
political and other uncertainties, including risks of:
- terrorist acts, war and civil disturbances,
- expropriation or nationalization of equipment,
- the inability to repatriate income or capital, and
- changing taxation policies.
Many governments favor or effectively require the awarding of drilling
contracts to local contractors or require foreign contractors to employ citizens
of, or purchase supplies from, a particular jurisdiction. These practices may
adversely affect our ability to compete.
Our non-U.S. contract drilling operations are subject to various laws and
regulations in countries in which we operate, including laws and regulations
relating to the equipment and operation of drilling units, currency conversions
and repatriation, oil and gas exploration and development and taxation of
offshore earnings and earnings of expatriate personnel. Governments in some
foreign countries have become increasingly active in regulating and controlling
the ownership of concessions and companies holding concessions, the exploration
of oil and gas and other aspects of the oil and gas industries in their
countries. In addition, government action, including initiatives by OPEC, may
continue to cause oil or gas price volatility. In some areas of the world, this
governmental activity has adversely affected the amount of exploration and
development work done by major oil companies and may continue to do so.
Another risk inherent in our operations is the possibility of currency
exchange losses where revenues are received and expenses are paid in foreign
currencies. We may also incur losses as a result of an inability to collect
revenues because of a shortage of convertible currency available to, or transfer
or exchange by, the country of operation.
FAILURE TO RETAIN KEY PERSONNEL COULD HURT OUR OPERATIONS.
We require highly skilled personnel to operate and provide technical
services and support for our drilling units. To the extent that demand for
drilling services and the size of the worldwide industry fleet increase,
shortages of qualified personnel could arise, creating upward pressure on wages.
On a worldwide basis, we had approximately 11.3 percent of our employees
working under collective bargaining agreements as of December 31, 2001, most of
whom were working in Norway, Nigeria, Brazil and Venezuela. Of these represented
employees, a majority are working under agreements that are subject to salary
negotiation in 2002. In addition, the Company has signed a recognition agreement
requiring negotiation with a labor union representing employees in the U.K.
These negotiations are expected to begin in the second quarter of 2002 and could
result in collective bargaining agreements covering these employees, which could
result in higher personnel expenses, other increased costs or increased
operating restrictions.
GOVERNMENTAL LAWS AND REGULATIONS MAY ADD TO OUR COSTS OR LIMIT DRILLING
ACTIVITY.
Our operations are affected from time to time in varying degrees by
governmental laws and regulations. The drilling industry is dependent on demand
for services from the oil and gas exploration industry and, accordingly, is also
affected by changing tax and other laws relating to the energy business
generally. We may be required to make significant capital expenditures to comply
with laws and regulations. It is also possible that these laws and regulations
may in the future add significantly to operating costs or may limit drilling
activity.
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COMPLIANCE WITH OR BREACH OF ENVIRONMENTAL LAWS CAN BE COSTLY AND COULD LIMIT
OUR OPERATIONS.
Our operations are subject to regulations controlling the discharge of
materials into the environment, requiring removal and cleanup of materials that
may harm the environment or otherwise relating to the protection of the
environment. For example, as an operator of mobile offshore drilling units in
navigable United States waters and some offshore areas, we may be liable for
damages and costs incurred in connection with oil spills related to those
operations. Laws and regulations protecting the environment have become more
stringent in recent years, and may in some cases impose strict liability,
rendering a person liable for environmental damage without regard to negligence.
These laws and regulations may expose us to liability for the conduct of or
conditions caused by others or for acts that were in compliance with all
applicable laws at the time they were performed. The application of these
requirements or the adoption of new requirements could have a material adverse
effect on our financial position and results of our operations.
OUR ADOPTION OF SFAS NO. 142 COULD ADVERSELY AFFECT EARNINGS.
In July 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets, which became effective for fiscal years beginning after December 15,
2001. SFAS No. 142 prohibits amortization of goodwill and requires that goodwill
be tested at least annually for impairment. The statement also includes specific
guidance for testing goodwill impairment. We adopted SFAS No. 142 as of January
1, 2002. Our management is currently evaluating SFAS No. 142 and the impact of
implementing the required goodwill impairment test on our consolidated financial
position and results of operations. While we have not completed our evaluation,
we believe that there could be a charge to earnings in 2002 for impairment of
goodwill and that such charge could be significant.
RECENT TERRORIST ATTACKS AND UNITED STATES MILITARY ACTION COULD RESULT IN A
MATERIAL ADVERSE EFFECT ON OUR BUSINESS.
On September 11, 2001, the United States was the target of terrorist
attacks of unprecedented scope. On October 7, 2001, the United States commenced
military action in Afghanistan in response to these attacks. Military action by
the United States may continue indefinitely and may escalate and armed
hostilities may begin or escalate in other countries. Further acts of terrorism
in the United States or elsewhere may occur, and such acts of terrorism could be
directed against companies such as ours. These developments have caused
instability in the world's financial and insurance markets and will likely
significantly increase political and economic instability in the geographic
areas in which we currently operate. In addition, these developments could lead
to increased volatility in prices for crude oil and natural gas and could affect
the markets for drilling services.
Following the terrorist attacks on September 11, 2001, insurance
underwriters increased insurance premiums charged for many of the coverages
historically maintained and issued general notices of cancellations to their
customers for war risk, terrorism and political risk insurance in respect of a
wide variety of insurance coverages, including but not limited to, liability and
aviation coverages. Our insurance underwriters renegotiated substantially higher
premium rates for war risk coverage, which can be cancelled by the underwriters
on short notice. Insurance premiums could be increased further or coverages may
be unavailable in the future.
United States government regulations effectively preclude us from actively
engaging in business activities in certain countries. These regulations could be
amended to cover countries where we currently operate or where we may wish to
operate in the future. These developments could subject the worldwide operations
of our company to increased risks and, depending on their magnitude, could have
a material adverse effect on our business.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and consent solicitation statement and the documents
incorporated by reference in this prospectus and consent solicitation statement
contain both historical and forward-looking statements. All statements other
than statements of historical fact are, or may be deemed to be, forward-looking
statements. Forward-looking statements include information concerning our
possible or assumed future financial performance and results of operations,
including statements about the following subjects:
- business strategy,
- expected capital expenditures,
- adequacy of source of funds for liquidity needs,
- results and effects of legal proceedings,
- liabilities for tax issues,
- adequacy of insurance coverage,
- the timing and cost of completion of capital projects,
- expiration of rig contracts,
- potential revenues,
- potential timing and proceeds of asset sales,
- increased expenses,
- customer drilling programs,
- utilization rates,
- dayrates,
- rig demand trends,
- other expectations with regard to outlook,
- number and timing of idle rig days,
- refinancing of indebtedness,
- loss contingencies and charges, and
- the potential savings and effects of our merger transaction with R&B
Falcon Corporation and restructuring the ownership of assets held by R&B
Falcon and its subsidiaries.
Forward-looking statements in this prospectus are identifiable by use of
the following words and other similar expressions, among others:
- "anticipate,"
- "believe,"
- "budget,"
- "could,"
- "estimate,"
- "expect,"
- "forecast,"
- "intent,"
- "may,"
- "might,"
- "plan,"
- "predict,"
- "project," and
- "should."
The following factors could affect our future results of operations and
could cause those results to differ materially from those expressed in the
forward-looking statements included in this prospectus and consent solicitation
statement or incorporated by reference:
- worldwide demand for oil and gas,
- uncertainties relating to the level of activity in offshore oil and gas
exploration and development,
- exploration success by producers,
- oil and gas prices (including U.S. natural gas prices),
- demand for offshore and inland water rigs,
20
- competition and market conditions in the contract drilling industry,
- our ability to successfully integrate the operations of acquired
businesses,
- costs and other difficulties related to our merger transaction with R&B
Falcon and the restructuring of the ownership of assets held by R&B
Falcon and its subsidiaries,
- delays or termination of drilling contracts due to a number of events,
- cost overruns on shipyard projects and possible cancellation of drilling
contracts as a result of delays or performance,
- work stoppages,
- our ability to enter into and the terms of future contracts,
- the availability of qualified personnel,
- labor relations and the outcome of negotiations with unions representing
workers,
- operating hazards,
- political and other uncertainties inherent in non-U.S. operations
(including exchange and currency fluctuations),
- war, terrorism and cancellation or unavailability of insurance coverage,
- the impact of governmental laws and regulations,
- compliance with or breach of environmental laws,
- the adequacy of sources of liquidity,
- the effect of litigation and contingencies, and
- other factors discussed in this prospectus and consent solicitation
statement and in our other filings with the SEC.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those indicated. You should not place undue reliance on forward-looking
statements. Each forward-looking statement speaks only as of the date of the
particular statement, and we undertake no obligation to publicly update or
revise any forward-looking statements. Nothing in this document is intended to
provide guidance for financial results for periods not yet reported by either
Transocean Sedco Forex or R&B Falcon. Any guidance given prior to the date of
this prospectus and consent solicitation statement in any other document filed
with the SEC prior to this date and incorporated into this prospectus and
consent solicitation statement spoke only as of the date such statement was made
and neither company undertook any obligation to update such statements. Any such
guidance may have been superseded and in any event should no longer be relied
upon by investors receiving this prospectus and consent solicitation statement.
ENFORCEABILITY OF CIVIL LIABILITIES AGAINST FOREIGN PERSONS
Transocean Sedco Forex is a Cayman Islands exempted company, and certain of
our officers and directors may be residents of various jurisdictions outside the
United States. All or a substantial portion of our assets and the assets of
these persons may be located outside the United States. As a result, it may be
difficult for investors to effect service of process within the United States
upon these persons or to enforce any United States court judgment obtained
against these persons that are predicated upon the civil liability provisions of
the Securities Act. We have agreed to be served with process with respect to
actions based on the exchange offers and consent solicitations. To bring a claim
against us, you may serve our Corporate Secretary,
21
c/o Transocean Sedco Forex Inc., 4 Greenway Plaza, Houston, Texas 77046, our
United States agent appointed for that purpose.
Walkers, our Cayman Islands legal counsel, has advised us that there is
doubt as to whether Cayman Islands courts would enforce (1) judgments of United
States courts obtained in actions against us or other persons that are
predicated on the civil liability provisions of the Securities Act or (2)
original actions brought against us or other persons predicated on the
Securities Act. There is no treaty between the United States and the Cayman
Islands providing for enforcement of judgments, and there are grounds upon which
Cayman Islands courts may not enforce judgments of United States courts. In
general, Cayman Islands courts would not enforce any remedies if they are deemed
to be penalties, fines, taxes or similar remedies.
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THE EXCHANGE OFFERS
PURPOSE OF THE EXCHANGE OFFERS
Since the acquisition of R&B Falcon, Transocean Sedco Forex has been
operationally and financially integrating R&B Falcon into the Transocean Sedco
Forex organization. See "Certain Related Transactions" for a description of some
of these integration and restructuring transactions. The proposed amendments to
the R&B Falcon indentures are intended to provide greater operational and
financial flexibility, including greater flexibility in continuing our
integration and restructuring efforts, and to allow us to structure our
operations and the operations of our subsidiaries in a more efficient manner and
allow for potential savings. See "The Proposed Amendments."
TERMS OF THE EXCHANGE OFFERS AND CONSENT SOLICITATIONS
Transocean Sedco Forex is offering to exchange its notes for each of the
six series of issued and outstanding R&B Falcon notes in six separate exchange
offers. Specifically, Transocean Sedco Forex is offering:
- $1,000 principal amount of Transocean Sedco Forex's 6.50% Notes due April
15, 2003 (the "Transocean 6.50% notes") for each $1,000 principal amount
of outstanding R&B Falcon 6.50% Notes due April 15, 2003 (the "R&B Falcon
6.50% notes").
- $1,000 principal amount of Transocean Sedco Forex's 6.75% Notes due April
15, 2005 (the "Transocean 6.75% notes"), for each $1,000 principal amount
of outstanding R&B Falcon 6.75% Notes due April 15, 2005 (the "R&B Falcon
6.75% notes").
- $1,000 principal amount of Transocean Sedco Forex's 6.95% Notes due April
15, 2008 (the "Transocean Sedco Forex 6.95% notes"), for each $1,000
principal amount of outstanding R&B Falcon 6.95% Notes due April 15, 2008
(the "R&B Falcon 6.95% notes").
- $1,000 principal amount of Transocean Sedco Forex's 7.375% Notes due
April 15, 2018 (the "Transocean 7.375% notes"), for each $1,000 principal
amount of outstanding R&B Falcon 7.375% Notes due April 15, 2018 (the
"R&B Falcon 7.375% notes").
- $1,000 principal amount of Transocean Sedco Forex's 9.125% Notes due
December 15, 2003 (the "Transocean 9.125% notes"), for each $1,000
principal amount of outstanding R&B Falcon 9.125% Notes due December 15,
2003 (the "R&B Falcon 9.125% notes").
- $1,000 principal amount of Transocean Sedco Forex's 9.50% Notes due
December 15, 2008 (the "Transocean 9.50% notes"), for each $1,000
principal amount of outstanding R&B Falcon 9.50% Notes due December 15,
2008 (the "R&B Falcon 9.50% notes").
The principal amounts, interest rates, redemption terms and payment and
maturity dates of a particular series of Transocean Sedco Forex notes offered in
the exchange offers are the same as those of the corresponding series of R&B
Falcon notes. The Transocean Sedco Forex notes you receive in exchange for R&B
Falcon notes will accrue interest from the last date to which interest has been
paid on those R&B Falcon notes. You will not receive a payment for accrued
interest on R&B Falcon notes you exchange at the time of that exchange.
The Transocean 6.50% notes, Transocean 6.75% notes, Transocean 6.95% notes,
Transocean 7.375% notes, Transocean 9.125% notes and Transocean 9.50% notes are
together referred to as the "Transocean Sedco Forex notes." The R&B Falcon 6.50%
notes, R&B Falcon 6.75% notes, R&B Falcon 6.95% notes, R&B Falcon 7.375% notes,
R&B Falcon 9.125% notes and R&B Falcon 9.50% notes are together referred to as
the "R&B Falcon notes." The indenture for the R&B Falcon 6.50% notes, R&B Falcon
6.75% notes, R&B Falcon 6.95% notes and R&B Falcon 7.375% notes is referred to
as the "R&B Falcon 6.50%-7.375% notes indenture." The
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indenture for the R&B Falcon 9.125% notes and R&B Falcon 9.50% notes is referred
to as the "R&B Falcon 9.125%-9.50% notes indenture." The R&B Falcon 6.50%-7.375%
notes indenture and the R&B Falcon 9.125%-9.50% notes indenture are together
referred to as the "R&B Falcon indentures."
Transocean Sedco Forex is also soliciting consents from the holders of each
series of R&B Falcon notes to effect a number of amendments to the R&B Falcon
indentures under which those notes were issued. For a description of the
proposed amendments, see "The Proposed Amendments." Transocean Sedco Forex's
obligation to complete each exchange offer and cause R&B Falcon to make the
consent payments relating to that exchange offer is conditioned on, among other
things, receipt of valid and unrevoked consents to the amendments from the
holders of record as of the close of business on , 2002 (such time and
date being herein referred to as the "Record Date") of a majority in principal
amount of each of the six series of R&B Falcon notes (the "Consent Condition"),
although Transocean Sedco Forex will be free to waive this or any other
condition with respect to any or all of the exchange offers. A holder validly
tendering notes for exchange will, by tendering those notes, be consenting to
the proposed amendments to the indenture under which those notes were issued.
In addition to the Transocean Sedco Forex notes that Transocean Sedco Forex
will issue in exchange for R&B Falcon notes, R&B Falcon will pay an amount in
cash equal to the applicable consent payment listed on the cover page of this
prospectus and consent solicitation statement to each holder of R&B Falcon notes
accepted for exchange if the holder has tendered those notes prior to the
applicable consent payment deadline. The consent payment deadline for each
exchange offer (that is, the time by which holders must tender R&B Falcon notes
in that offer in order to be eligible to receive the consent payment) will be
5:00 p.m., New York City time, on , 2002, unless extended.
R&B FALCON WILL MAKE A CONSENT PAYMENT FOR R&B FALCON NOTES IF AND ONLY IF
THE HOLDER OF THOSE NOTES TENDERS THOSE NOTES IN THE APPLICABLE EXCHANGE OFFER
PRIOR TO THE APPLICABLE CONSENT PAYMENT DEADLINE AND TRANSOCEAN SEDCO FOREX IN
FACT EXCHANGES THOSE NOTES FOR TRANSOCEAN SEDCO FOREX NOTES IN THAT EXCHANGE
OFFER.
If the required consents are received with respect to each series of R&B
Falcon notes, then R&B Falcon and the trustee with respect to each series of the
R&B Falcon notes under the R&B Falcon indentures (the "R&B Falcon trustee") will
execute supplemental indentures setting forth the proposed amendments in respect
of all series. If the required consents are received with respect to one or
more, but not all, series of R&B Falcon notes and Transocean Sedco Forex waives
the condition that it receive consents to the proposed amendments to the R&B
Falcon indenture with respect to each series of R&B Falcon notes, then R&B
Falcon and the R&B Falcon trustee will execute a supplemental indenture setting
forth the proposed amendments in respect of the series as to which the required
consents are received. Under the terms of the supplemental indentures, the
amendments will not become operative with respect to a series of R&B Falcon
notes unless and until Transocean Sedco Forex exchanges all R&B Falcon notes of
that series validly tendered and not withdrawn for Transocean Sedco Forex notes
of the corresponding series pursuant to the applicable exchange offer, even if
all notes of that series that were validly tendered are withdrawn. Each
non-exchanging holder of that series of R&B Falcon notes will be bound by the
supplemental indenture.
CONDITIONS TO THE EXCHANGE OFFERS AND CONSENT SOLICITATIONS
Transocean Sedco Forex's obligation to complete each exchange offer and
cause R&B Falcon to make the consent payments relating to that exchange offer is
subject to the satisfaction or waiver (by Transocean Sedco Forex) of the
following conditions: (a) the Consent Condition described under "Terms of the
Exchange Offers and Consent Solicitations" above, (b) the valid tender (and no
withdrawal) of a majority in principal amount held by nonaffiliates of R&B
Falcon of each of the six series of R&B Falcon notes as of the expiration date
of the
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exchange offer, as may be extended, for that series of R&B Falcon notes and (c)
the following statements being true:
(1) In the reasonable judgment of Transocean Sedco Forex, no action or
event has occurred or been threatened (including a default under an
agreement, indenture or other instrument or obligation to which Transocean
Sedco Forex or one of its affiliates is a party or by which it is bound),
no action is pending, no action has been taken, and no statute, rule,
regulation, judgment, order, stay, decree or injunction has been
promulgated, enacted, entered, enforced or deemed applicable to the
exchange offers, the exchange of R&B Falcon notes under the exchange
offers, the consent solicitations or the proposed amendments, by or before
any court or governmental, regulatory or administrative agency, authority
or tribunal, which either:
- challenges the exchange offers, the exchange of R&B Falcon notes
under the exchange offers, the consent solicitations or the
proposed amendments or might, directly or indirectly, prohibit,
prevent, restrict or delay consummation of, or might otherwise
adversely affect in any material manner, the exchange offers, the
exchange of R&B Falcon notes under the exchange offers, the
consent solicitations or the proposed amendments, or
- in the reasonable judgment of Transocean Sedco Forex, could
materially affect the business, condition (financial or
otherwise), income, operations, properties, assets, liabilities
or prospects of Transocean Sedco Forex and its subsidiaries,
taken as a whole, or materially impair the contemplated benefits
to Transocean Sedco Forex of the exchange offers, the exchange of
R&B Falcon notes under the exchange offers, the consent
solicitations or the proposed amendments, or might be material to
holders of R&B Falcon notes in deciding whether to accept the
exchange offers and give their consents;
(2) None of the following has occurred:
- any general suspension of or limitation on trading in securities
on any United States or European national securities exchange or
in the over-the-counter market (whether or not mandatory),
- any material adverse change in the prices of the R&B Falcon
notes,
- a material impairment in the general trading market for debt
securities,
- a declaration of a banking moratorium or any suspension of
payments in respect of banks by federal or state authorities in
the United States (whether or not mandatory),
- a commencement or escalation of a war, armed hostilities,
terrorist act or other national or international crisis directly
or indirectly relating to the United States,
- any limitation (whether or not mandatory) by any governmental
authority on, or other event having a reasonable likelihood of
affecting, the extension of credit by banks or other lending
institutions in the United States,
- any material adverse change in United States securities or
financial markets generally, or
- in the case of any of the foregoing existing at the time of the
commencement of the exchange offers, a material acceleration or
worsening thereof; and
(3) The R&B Falcon trustee has executed and delivered a supplemental
indenture relating to the proposed amendments and has not objected in any
respect to, or taken any action that could in the reasonable judgment of
Transocean Sedco Forex adversely affect the
25
consummation of, any of the exchange offers, the exchange of R&B Falcon
notes under the exchange offers, the consent solicitations or Transocean
Sedco Forex's ability to effect the proposed amendments, nor has the R&B
Falcon trustee taken any action that challenges the validity or
effectiveness of the procedures used by Transocean Sedco Forex in
soliciting consents (including the form thereof) or in making the exchange
offers, the exchange of the R&B Falcon notes under the exchange offers or
the consent solicitations.
All of these conditions are for the sole benefit of Transocean Sedco Forex
and may be waived by Transocean Sedco Forex, in whole or in part, and with
respect to the exchange offers for any or all series of R&B Falcon notes, in its
sole discretion. Any determination made by Transocean Sedco Forex concerning
these events, developments or circumstances shall be conclusive and binding.
If any of these conditions are not satisfied with respect to a particular
series of R&B Falcon notes, Transocean Sedco Forex may, at any time before or
concurrently with the consummation of the exchange offer or consent solicitation
with respect to that series:
(1) terminate the exchange offer and the consent solicitation with
respect to that series of R&B Falcon notes and return all tendered R&B
Falcon notes of that series to the holders thereof (whether or not it
terminates the exchange offers and consent solicitations with respect to
any or all other series of R&B Falcon notes),
(2) modify, extend or otherwise amend the exchange offer and consent
solicitation with respect to that series of R&B Falcon notes (whether or
not it modifies, extends or otherwise amends the exchange offers and
consent solicitations with respect to any or all other series of R&B Falcon
notes) and retain all tendered R&B Falcon notes of that series and consents
until the expiration date, as extended, of such exchange offer and consent
solicitation, subject, however, to the withdrawal rights of holders (See
"The Exchange Offers -- Withdrawal of Tenders and Revocation of
Corresponding Consents" and "-- Consent Payment Deadline; Expiration Date;
Extensions; Amendments"), or
(3) waive the unsatisfied conditions with respect to such exchange
offer and consent solicitation and accept all R&B Falcon notes of that
series tendered and not previously withdrawn (whether or not it waives
these conditions for the exchange offers and consent solicitations with
respect to any or all other series of R&B Falcon notes).
CONSENT PAYMENT DEADLINE; EXPIRATION DATE; EXTENSIONS; AMENDMENTS
For purposes of each of the consent solicitations, the term "consent
payment deadline" means 5:00 p.m., New York City time, on , 2002,
subject to the right of Transocean Sedco Forex to extend that date and time for
any of the consent solicitations in its sole discretion (whether or not it
extends that date and time with respect to any or all other consent
solicitations), in which case the consent payment deadline shall be, with
respect to any such extended consent solicitation, the latest date and time to
which that consent payment deadline is extended.
For purposes of each of the exchange offers, the term "expiration date"
means 5:00 p.m., New York City time, on , 2002, subject to the right
of Transocean Sedco Forex to extend that date and time for any of the exchange
offers in its sole discretion, in which case the expiration date shall be, with
respect to any such extended exchange offer, the latest date and time to which
that exchange offer is extended.
Transocean Sedco Forex reserves the right, in its sole discretion, to (1)
delay accepting any validly tendered R&B Falcon notes of any series, (2) extend
any or all of the exchange offers, or (3) terminate or amend any or all of the
exchange offers, by giving oral or written notice of such delay, extension,
termination or amendment to the exchange agent. Any such delay in acceptance,
extension, termination or amendment will be followed as promptly as practicable
by
26
a public announcement thereof which, in the case of an extension, will be made
no later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled expiration date.
Transocean Sedco Forex also reserves the right, in its sole discretion, to
provide a subsequent offering period of between three and 20 business days for
any or all of the exchange offers. If a subsequent offering period is provided,
all R&B Falcon notes validly tendered and not withdrawn prior to the expiration
date of the initial offering period will be accepted and exchanged for
Transocean Sedco Forex notes and we will make a public announcement of the
subsequent offering period no later than 9:00 a.m., New York City time, on the
next business day after the expiration date of the initial offering period.
Unless otherwise provided in the announcement of the subsequent offering period,
all R&B Falcon notes validly tendered during the subsequent offering period will
be promptly accepted and exchanged for the applicable series of Transocean Sedco
Forex notes as they are tendered. Unless otherwise provided in the announcement
of the subsequent offering period, holders of R&B Falcon notes will not have the
right to withdraw notes tendered during the subsequent offering period and no
consent payment will be made with respect to notes tendered during the
subsequent offering period.
If the exchange offers are amended in a manner determined by Transocean
Sedco Forex to constitute a material change, Transocean Sedco Forex will
promptly disclose such amendment and Transocean Sedco Forex will extend the
exchange offers to a date five to ten business days after disclosing the
amendment, depending upon the significance of the amendment and the manner of
disclosure to the holders, if the exchange offers would otherwise have expired
during such five to ten business day period.
Without limiting the manner in which Transocean Sedco Forex may choose to
make a public announcement of any delay, extension, amendment or termination of
any of the exchange offers and consent solicitations, Transocean Sedco Forex
will have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a timely release to any appropriate
news agency, including the Dow Jones News Service.
EFFECT OF TENDER
Any tender by a holder of any series of R&B Falcon notes that is not
withdrawn prior to the expiration date of the applicable exchange offer will
constitute a binding agreement between that holder and Transocean Sedco Forex,
and, if not withdrawn prior to the applicable consent payment deadline, a
consent to the proposed amendments, upon the terms and subject to the conditions
of that exchange offer and the letter of transmittal and consent. The acceptance
of an exchange offer by a tendering holder of any series of R&B Falcon notes
will constitute the agreement by that holder to deliver good and marketable
title to the tendered R&B Falcon notes, free and clear of all liens, charges,
claims, encumbrances, interests and restrictions of any kind.
ABSENCE OF DISSENTERS' RIGHTS
Holders of the R&B Falcon notes do not have any appraisal or dissenters'
rights under New York law, the law governing the R&B Falcon indentures and the
R&B Falcon notes, or under the terms of the R&B Falcon indentures in connection
with the exchange offers and consent solicitations.
ACCOUNTING TREATMENT OF EXCHANGE OFFERS
The exchange offers will be accounted for by Transocean Sedco Forex as an
exchange of debt under United States generally accepted accounting principles.
The Transocean Sedco Forex notes to be issued in the exchange offers will be
recorded at the same carrying value as the R&B Falcon notes. Accordingly,
Transocean Sedco Forex will recognize no gain or loss for accounting
27
purposes upon the consummation of the exchange offers. Transocean Sedco Forex
will amortize a portion of the expenses of the exchange offers over the term of
the Transocean Sedco Forex notes issued in the exchange offers.
ACCEPTANCE OF R&B FALCON NOTES FOR EXCHANGE; DELIVERY OF TRANSOCEAN SEDCO FOREX
NOTES AND CONSENT PAYMENTS
Assuming the conditions to the exchange offers are satisfied or waived,
Transocean Sedco Forex will issue new notes in book-entry form and cause R&B
Falcon to make consent payments in exchange for R&B Falcon notes on the third
business day following the expiration date of the applicable exchange offer or
as soon as practicable after that date. We refer to the date on which we
exchange Transocean Sedco Forex notes for R&B Falcon notes pursuant to any
exchange offer as the "exchange date" for that exchange offer.
Transocean Sedco Forex will be deemed to have accepted validly tendered R&B
Falcon notes of any series when, and if, Transocean Sedco Forex has given oral
or written notice thereof to the exchange agent. Subject to the terms and
conditions of the exchange offers, delivery of Transocean Sedco Forex notes and
consent payments for R&B Falcon notes of any series accepted by Transocean Sedco
Forex will be made by the exchange agent on the applicable exchange date upon
receipt of such notice. The exchange agent will act as agent for tendering
holders of the R&B Falcon notes for the purpose of receiving R&B Falcon notes
from and transmitting Transocean Sedco Forex notes and consent payments to such
holders. If any tendered R&B Falcon notes are not accepted for any reason set
forth in the terms and conditions of the exchange offers or if R&B Falcon notes
are withdrawn prior to the expiration of the applicable exchange offer, such
unaccepted or withdrawn R&B Falcon notes will be returned without expense to the
tendering holder as promptly as practicable after the expiration or termination
of the applicable exchange offer.
PROCEDURES FOR TENDERING
If you hold R&B Falcon notes of any series and wish to have those notes
exchanged for Transocean Sedco Forex notes of the corresponding series, you must
validly tender (or cause the valid tender of) your R&B Falcon notes using the
procedures described in this prospectus and consent solicitation statement and
in the accompanying letter of transmittal and consent. The proper tender of R&B
Falcon notes will constitute an automatic consent to the proposed amendments to
the R&B Falcon indentures.
The procedures by which you may tender or cause to be tendered R&B Falcon
notes will depend upon the manner in which you hold the R&B Falcon notes, as
described below.
TENDER OF R&B FALCON NOTES HELD THROUGH A NOMINEE
If you are a beneficial owner of R&B Falcon notes that are held of record
by a custodian bank, depositary, broker, trust company or other nominee, and you
wish to tender R&B Falcon notes in any of the exchange offers, you should
contact the record holder promptly and instruct the record holder to tender the
R&B Falcon notes and deliver a consent on your behalf using one of the
procedures described below.
TENDER OF R&B FALCON NOTES HELD WITH DTC
Pursuant to authority granted by The Depository Trust Company, or DTC, if
you are a DTC participant that has R&B Falcon notes credited to your DTC account
and thereby held of record by DTC's nominee, you may directly tender your R&B
Falcon notes and deliver a consent as if you were the record holder.
Accordingly, references herein to record holders include DTC participants with
R&B Falcon notes credited to their accounts. Within two business days after the
28
date of this prospectus and consent solicitation statement, the exchange agent
will establish accounts with respect to the R&B Falcon notes at DTC for purposes
of the exchange offers.
Any participant in DTC may tender R&B Falcon notes and deliver a consent to
the proposed amendments to the R&B Falcon indentures by effecting a book-entry
transfer of the R&B Falcon notes to be tendered in the applicable exchange
offer(s) into the account of the exchange agent at DTC and either (1)
electronically transmitting its acceptance of the applicable exchange offer
through DTC's Automated Tender Offer Program ("ATOP") procedures for transfer;
or (2) completing and signing the letter of transmittal and consent according to
the instructions and delivering it, together with any signature guarantees and
other required documents, to the exchange agent at its address on the back cover
page of this prospectus and consent solicitation statement, in either case
before the applicable exchange offer(s) expire(s).
If ATOP procedures are followed, DTC will verify each acceptance
transmitted to it, execute a book-entry delivery to the exchange agent's account
at DTC and send an agent's message to the exchange agent. An "agent's message"
is a message, transmitted by DTC to and received by the exchange agent and
forming part of a book-entry confirmation, which states that DTC has received an
express acknowledgement from a DTC participant tendering R&B Falcon notes that
the participant has received and agrees to be bound by the terms of the letter
of transmittal and consent and that Transocean Sedco Forex and R&B Falcon may
enforce the agreement against the participant. DTC participants following this
procedure should allow sufficient time for completion of the ATOP procedures
prior to the expiration date of the applicable exchange offer.
The letter of transmittal and consent (or facsimile thereof), with any
required signature guarantees, or (in the case of book-entry transfer) an
agent's message in lieu of the letter of transmittal and consent, and any other
required documents, must be transmitted to and received by the exchange agent
prior to the expiration date of the applicable exchange offer at one of its
addresses set forth on the back cover page of this prospectus and consent
solicitation statement. Delivery of such documents to DTC does not constitute
delivery to the exchange agent.
LETTER OF TRANSMITTAL AND CONSENT
Subject to and effective upon the acceptance for exchange and exchange of
Transocean Sedco Forex notes for R&B Falcon notes tendered by a letter of
transmittal and consent in accordance with the terms and subject to the
conditions set forth in this prospectus and consent solicitation statement, by
executing and delivering a letter of transmittal and consent (or agreeing to the
terms of a letter of transmittal and consent pursuant to an agent's message) a
tendering holder of R&B Falcon notes:
- irrevocably sells, assigns and transfers to or upon the order of
Transocean Sedco Forex all right, title and interest in and to, and all
claims in respect of or arising or having arisen as a result of the
holder's status as a holder of the R&B Falcon notes tendered thereby,
- waives any and all rights with respect to the R&B Falcon notes (including
any existing or past defaults and their consequences in respect of the
R&B Falcon notes),
- releases and discharges Transocean Sedco Forex, R&B Falcon and the R&B
Falcon trustee from any and all claims such holder may have, now or in
the future, arising out of or related to the R&B Falcon notes, including
any claims that such holder is entitled to receive additional principal
or interest payments with respect to the R&B Falcon notes (other than as
expressly provided in this document and in the letter of transmittal and
consent) or to participate in any redemption or defeasance of the R&B
Falcon notes,
- represents and warrants that the R&B Falcon notes tendered were owned as
of the date of tender, free and clear of all liens, charges, claims,
encumbrances, interests and restrictions of any kind,
29
- consents to the proposed amendments described under "Proposed Amendments"
below, and
- irrevocably constitutes and appoints the exchange agent the true and
lawful agent and attorney-in-fact of the holder with respect to any
tendered R&B Falcon notes, with full powers of substitution and
revocation (such power of attorney being deemed to be an irrevocable
power coupled with an interest) to cause the R&B Falcon notes tendered to
be assigned, transferred and exchanged in the applicable exchange offer.
There is a single form of letter of transmittal and consent that you can
fill out for any series of R&B Falcon notes.
PROPER EXECUTION AND DELIVERY OF LETTER OF TRANSMITTAL AND CONSENT
If you wish to participate in the exchange offers and consent
solicitations, delivery of your R&B Falcon notes, signature guarantees and other
required documents are your responsibility. Delivery is not complete until the
required items are actually received by the exchange agent. If you mail these
items, Transocean Sedco Forex recommends that you (1) use registered mail
properly insured with return receipt requested and (2) mail the required items
sufficiently in advance of the expiration date with respect to the applicable
exchange offer to allow sufficient time to ensure timely delivery.
Except as otherwise provided below, all signatures on the letter of
transmittal and consent or a notice of withdrawal must be guaranteed by a
recognized participant in the Securities Transfer Agents Medallion Program, the
NYSE Medallion Signature Program or the Stock Exchange Medallion Program.
Signatures on the letter of transmittal and consent need not be guaranteed if:
- the letter of transmittal and consent is signed by a participant in DTC
whose name appears on a security position listing of DTC as the owner of
the R&B Falcon notes and the portion entitled "Special Issuance and
Payment Instructions" or "Special Delivery Instructions" on the letter of
transmittal and consent has not been completed, or
- the R&B Falcon notes are tendered for the account of an Eligible
Institution. See Instruction 4 in the letter of transmittal and consent.
WITHDRAWAL OF TENDERS AND REVOCATION OF CORRESPONDING CONSENTS
Tenders of R&B Falcon notes in connection with any of the exchange offers
may be withdrawn at any time prior to expiration of the applicable exchange
offer. Tenders of R&B Falcon notes may not be withdrawn at any time after
expiration. The valid withdrawal of tendered R&B Falcon notes prior to the
applicable consent payment deadline will be deemed to be a concurrent revocation
of the related consent to the proposed amendments to the applicable R&B Falcon
indenture. You may only revoke a consent by validly withdrawing the related R&B
Falcon notes prior to the consent payment deadline.
Beneficial owners desiring to withdraw R&B Falcon notes previously tendered
should contact the DTC participant through which they hold their R&B Falcon
notes. In order to withdraw R&B Falcon notes previously tendered, a DTC
participant may, prior to the expiration date of the applicable exchange offer,
withdraw its instruction previously transmitted through ATOP by (1) withdrawing
its acceptance through ATOP, or (2) delivering to the exchange agent by mail,
hand delivery or facsimile transmission, notice of withdrawal of such
instruction. The notice of withdrawal must contain the name and number of the
DTC participant. Withdrawal of a prior instruction will be effective upon
receipt of such notice of withdrawal by the exchange agent. All signatures on a
notice of withdrawal must be guaranteed by a recognized participant in the
Securities Transfer Agents Medallion Program, the NYSE Medallion Signature
Program or the Stock Exchange Medallion Program, except that signatures on the
notice of withdrawal need not be guaranteed if the R&B Falcon notes being
withdrawn are held for the account of an Eligible
30
Institution. A withdrawal of an instruction must be executed by a DTC
participant in the same manner as such DTC participant's name appears on its
transmission through ATOP to which such withdrawal relates. A DTC participant
may withdraw a tender only if such withdrawal complies with the provisions
described in this paragraph.
Withdrawals of tenders of R&B Falcon notes may not be rescinded and any R&B
Falcon notes withdrawn will thereafter be deemed not validly tendered for
purposes of any exchange offer. Properly withdrawn R&B Falcon notes, however,
may be retendered by following the procedures described above at any time prior
to expiration of the applicable exchange offer.
MISCELLANEOUS
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of R&B Falcon notes in
connection with any exchange offer will be determined by Transocean Sedco Forex,
in its sole discretion, whose determination will be final and binding.
Transocean Sedco Forex reserves the absolute right to reject any or all tenders
not in proper form or the acceptance for exchange of which may, in the opinion
of counsel for Transocean Sedco Forex, be unlawful. Transocean Sedco Forex also
reserves the absolute right to waive any defect or irregularity in the tender of
any R&B Falcon notes in any exchange offer, and the interpretation by Transocean
Sedco Forex of the terms and conditions of its exchange offers (including the
instructions in the letter of transmittal and consent) will be final and binding
on all parties. None of Transocean Sedco Forex, R&B Falcon, the exchange agent,
the information agent, the dealer managers or any other person will be under any
duty to give notification of any defects or irregularities in tenders or incur
any liability for failure to give any such notification.
Tenders of R&B Falcon notes involving any irregularities will not be deemed
to have been made until such irregularities have been cured or waived. R&B
Falcon notes received by the exchange agent in connection with any exchange
offer that are not validly tendered and as to which the irregularities have not
been cured or waived will be returned by the exchange agent to the DTC
participant who delivered such R&B Falcon notes by crediting an account
maintained at DTC designated by such DTC participant as promptly as practicable
after the expiration date of the applicable exchange offer or the withdrawal or
termination of the applicable exchange offer.
TRANSFER TAXES
Transocean Sedco Forex will pay all transfer taxes, if any, applicable to
the transfer and sale of R&B Falcon notes to Transocean Sedco Forex in the
exchange offers. If transfer taxes are imposed for any other reason, the amount
of those transfer taxes, whether imposed on the registered holders or any other
persons, will be payable by the tendering holder. Other reasons transfer taxes
could be imposed include:
- if Transocean Sedco Forex notes in book-entry form are to be registered
in the name of any person other than the person signing the letter of
transmittal and consent, or
- if tendered R&B Falcon notes are registered in the name of any person
other than the person signing the letter of transmittal and consent.
If satisfactory evidence of payment of or exemption from those transfer
taxes is not submitted with the letter of transmittal and consent, the amount of
those transfer taxes will be billed directly to the tendering holder and/or
withheld from any payments due with respect to the R&B Falcon notes tendered by
such holder.
U.S. FEDERAL BACKUP WITHHOLDING; WITHHOLDING ON CONSENT PAYMENTS TO NON-U.S.
HOLDERS
U.S. federal income tax law requires that a holder of R&B Falcon notes,
whose notes are accepted for exchange, provide the exchange agent, as payer,
with the holder's correct taxpayer
31
identification number or otherwise establish a basis for an exemption from
backup withholding. This information should be provided on Internal Revenue
Service (IRS) Form W-9. In the case of a holder who is an individual, other than
a resident alien, this identification number is his or her social security
number. For holders other than individuals, the identification number is an
employer identification number. Exempt holders, including, among others, all
corporations and certain foreign individuals, are not subject to these backup
withholding and reporting requirements, but must establish that they are so
exempt. If you do not provide the exchange agent with your correct taxpayer
identification number or an adequate basis for an exemption or a completed IRS
Form W-8BEN ("Certificate of Foreign Status of Beneficial Owner for United
States Tax Withholding"), you may be subject to backup withholding on payments
made in exchange for any R&B Falcon notes and a penalty imposed by the IRS.
Backup withholding is not an additional federal income tax. Rather, the amount
of tax withheld will be credited against the federal income tax liability of the
holder subject to backup withholding. If backup withholding results in an
overpayment of taxes, you may obtain a refund from the IRS. You should consult
with a tax advisor regarding qualifications for exemption from backup
withholding and the procedure for obtaining the exemption.
To prevent backup withholding, you must either (1) provide a completed IRS
Form W-9 and indicate either (a) your correct taxpayer identification number, or
(b) an adequate basis for an exemption, or (2) provide a completed Form W-8BEN.
In compliance with U.S. federal withholding tax requirements applicable to
payments of certain U.S. source income to foreign persons, R&B Falcon intends to
withhold tax at the rate of 30% on consent payments made to non-U.S. holders,
unless the holder establishes an exemption or a reduced rate. See "Material U.S.
Federal Income Tax Consequences -- Non-U.S. Holders -- Consent Payments."
EXCHANGE AGENT
Mellon Investor Services LLC has been appointed the exchange agent for the
exchange offers and consent solicitations. Letters of transmittal and consent
and all correspondence in connection with the exchange offers should be sent or
delivered by each holder of R&B Falcon notes, or a beneficial owner's custodian
bank, depositary, broker, trust company or other nominee, to the exchange agent
at the addresses and telephone numbers set forth on the back cover page of this
prospectus and consent solicitation statement. Transocean Sedco Forex will pay
the exchange agent reasonable and customary fees for its services and will
reimburse it for its reasonable, out-of-pocket expenses in connection therewith.
INFORMATION AGENT
Mellon Investor Services LLC has been appointed as the information agent
for the exchange offers and the consent solicitations, and will receive
customary compensation for its services. Questions concerning tender procedures
and requests for additional copies of this prospectus and consent solicitation
statement or the letter of transmittal and consent should be directed to the
information agent at the address and telephone numbers set forth on the back
cover page of this prospectus and consent solicitation statement. Holders of R&B
Falcon notes may also contact their custodian bank, depositary, broker, trust
company or other nominee for assistance concerning the exchange offers.
DEALER MANAGERS
Transocean Sedco Forex has retained Goldman, Sachs & Co. to act as dealer
managers in connection with the exchange offers and consent solicitations and
will pay to the dealer managers for soliciting tenders in the exchange offers a
customary percentage of the total principal amount outstanding of each series of
R&B Falcon notes if the Consent Condition is
32
satisfied and the exchange offers are completed. If the Consent Condition is not
satisfied or the exchange offer related to any of the six series of R&B Falcon
notes is not completed, Transocean Sedco Forex will pay the dealer managers the
same customary percentage of the total principal amount of R&B Falcon notes
tendered and accepted for exchange by Transocean Sedco Forex pursuant to the
exchange offers. Transocean Sedco Forex will also reimburse the dealer managers
for certain expenses. The obligations of the dealer managers to perform such
function are subject to certain conditions. Transocean Sedco Forex has agreed to
indemnify the dealer managers against certain liabilities, including liabilities
under the federal securities laws. Questions regarding the terms of the exchange
offers or the consent solicitations may be directed to the dealer managers at
the address and telephone numbers set forth on the back cover page of this
prospectus and consent solicitation statement.
From time to time, the dealer managers have provided, and may provide in
the future, investment banking and other services for Transocean Sedco Forex and
R&B Falcon for customary compensation.
OTHER FEES AND EXPENSES
The expenses of soliciting tenders of the R&B Falcon notes will be borne by
Transocean Sedco Forex. The principal solicitation is being made by mail;
however, additional solicitations may be made by facsimile transmission,
telephone or in person by the dealer managers and the information agent, as well
as by officers and other employees of Transocean Sedco Forex and its affiliates.
Tendering holders of R&B Falcon notes will not be required to pay any fee
or commission to the dealer managers. However, if a tendering holder handles the
transaction through its broker, dealer, commercial bank, trust company or other
institution, such holder may be required to pay brokerage fees or commissions.
33
DESCRIPTION OF DIFFERENCES BETWEEN
THE R&B FALCON NOTES AND THE TRANSOCEAN SEDCO FOREX NOTES
The following is a summary comparison of the material terms of the R&B
Falcon notes (four series of which were issued under the R&B Falcon 6.50%-7.375%
notes indenture and two series of which were issued under the R&B Falcon
9.125%-9.50% notes indenture) and the Transocean Sedco Forex notes. Each series
of the Transocean Sedco Forex notes issued in the exchange offers will be
governed by the Transocean Sedco Forex indenture. The summary does not purport
to be complete and is qualified in its entirety by reference to the R&B Falcon
indentures and the Transocean Sedco Forex indenture. Copies of those indentures
have been filed as exhibits to the registration statement of which this
prospectus and consent solicitation statement forms a part and are available
from the information agent upon request. See "Where You Can Find More
Information" for information as to how you can obtain a copy of the indentures
from the SEC.
The R&B Falcon notes represent, as of the date of this prospectus and
consent solicitation statement, the only debt securities issued under the R&B
Falcon indentures.
Capitalized terms used in the descriptions of the R&B Falcon notes and the
Transocean Sedco Forex notes below and not otherwise defined in this prospectus
and consent solicitation statement have the meanings given to such terms in the
R&B Falcon 6.50%-7.375% notes indenture, the R&B Falcon 9.125%-9.50% notes
indenture and the Transocean Sedco Forex indenture, respectively. For purposes
of the description of the R&B Falcon notes, the term "R&B Falcon" refers to R&B
Falcon Corporation (and any successor person or entity, as provided in the R&B
Falcon indentures), but does not include its subsidiaries. For purposes of the
description of the Transocean Sedco Forex notes, the term "Transocean Sedco
Forex" refers to Transocean Sedco Forex Inc. (and any successor person or
entity, as provided in the Transocean Sedco Forex indenture), but does not
include its subsidiaries. Section references in the descriptions of the notes
below are references to the applicable indenture under which the notes were or
will be issued.
The description of the R&B Falcon notes reflects the R&B Falcon notes as
currently constituted and does not reflect any changes to the covenants and
other terms of the R&B Falcon notes or the R&B Falcon indentures that may be
effected following the consent solicitations as described under "The Proposed
Amendments."
THE R&B FALCON NOTES THE TRANSOCEAN SEDCO FOREX NOTES
-------------------- --------------------------------
LIMITATION ON LIENS LIMITATION ON LIENS
R&B Falcon covenants under the R&B Falcon indentures that it In the Transocean Sedco Forex indenture, Transocean Sedco
will not, and will not permit any subsidiary to issue, Forex has agreed that it will not create, assume or allow to
assume or guarantee any notes, bonds, debentures or other exist any debt secured by a lien upon any of its drilling rigs
similar evidences of indebtedness for money borrowed se- or drillships, unless Transocean Sedco Forex secures each
cured by a lien on property or assets now owned or hereafter series of debt securities issued under the Transocean Sedco
acquired by R&B Falcon or such subsidiary, without Forex indenture equally and ratably with the secured debt.
effectively providing that each series of debt securities This covenant has exceptions that permit:
issued under the R&B Falcon indentures will be secured
equally and ratably with that indebtedness, so long as that - liens already existing on the date the applicable series of
indebtedness will be so secured. This restriction does not debt securities is issued,
apply to certain types of liens described in this provision
of the R&B Falcon notes indentures, including: - liens already existing on a particular drilling rig or
drillship at the time Transocean Sedco Forex acquires that
- liens existing on the date the debt securities were drilling rig or drillship, and liens already existing on
originally issued; drilling rigs or drillships of a corporation or other entity
at the time it becomes Transocean Sedco Forex's subsidiary,
34
THE R&B FALCON NOTES THE TRANSOCEAN SEDCO FOREX NOTES
-------------------- --------------------------------
- liens on property securing (1) all or any portion of the
cost of acquiring, constructing, altering, improving or - liens securing debt incurred to finance the acquisition,
repairing any property or assets, real or personal, or completion of construction and commencement of commercial
improvements used or to be used in connection with such operation, alteration, repair or improvement of any drilling
property or (2) Indebtedness incurred by R&B Falcon or any rig or drillship, if the debt was incurred prior to, at the
subsidiary of R&B Falcon prior to or within one year after time of or within 12 months after that event, and liens
the later of the acquisition, the completion of securing debt in excess of the purchase price or cost if
construction, alteration, improvement or repair or the recourse on the debt is only against the drilling rig or
commencement of commercial operation thereof, which drillship in question,
indebtedness is incurred for the purpose of financing all or
any part of the purchase price thereof or construction or - liens securing intercompany debt,
improvements thereon;
- liens in favor of a governmental entity to secure either (1)
- liens securing indebtedness owed by a subsidiary of R&B payments under any contract or statute or (2) industrial
Falcon to R&B Falcon or to any other subsidiary of R&B development, pollution control or similar indebtedness,
Falcon;
- liens imposed by law such as mechanics' or workmen's liens,
- liens on property existing at the time of acquisition of
such property by R&B Falcon or any of its subsidiaries or - governmental liens under contracts for the sale of products
liens on the property of any person existing at the time or services,
such person becomes a subsidiary of R&B Falcon and, in any
case, not incurred as a result of (or in connection with - liens under workers compensation laws or similar
or in anticipation of) the acquisition of such property or legislation,
such person becoming a subsidiary of R&B Falcon, provided
that such liens do not extend to or cover any property or - liens in connection with legal proceedings or securing taxes
assets of R&B Falcon or any of its subsidiaries other than or assessments,
the property encumbered at the time such property is
acquired by R&B Falcon or any of its subsidiaries or such - good faith deposits in connection with bids, tenders,
person becomes a subsidiary of R&B Falcon and, in any contracts or leases,
case, do not secure indebtedness with a principal amount
in excess of the principal amount outstanding at such - deposits made in connection with maintaining self-insurance,
time; to obtain the benefits of laws, regulations or arrangements
relating to unemployment insurance, old age pensions, social
- liens on any property securing (1) indebtedness incurred security or similar matters or to secure surety, appeal or
in connection with the construction, installation or customs bonds, and
financing of pollution control or abatement facilities or
other forms of industrial revenue bond financing or (2) - any extensions, renewals or replacements of the
indebtedness issued or guaranteed by the United States or above-described liens if both of the following conditions
any State thereof or any department, agency or are met:
instrumentality of either; and
(1) the amount of debt secured by the new lien does not exceed
- any lien extending, renewing or replacing (or successive the amount of debt secured by the existing lien, plus any
extensions, renewals or replacements of) any lien of any additional debt used to complete a specific project, and
type permitted under the bullets above excluding the third
bullet point, provided that such lien extends to or covers (2) the new lien is limited to all or a part of the drilling
only the property that is subject to the lien being rigs or drillships (plus any improvements) secured by the
extended, renewed or replaced and that the principal original lien issued under the indenture.
amount of the indebtedness secured thereby shall not
exceed the principal amount of indebtedness so secured at
the time of such extension, renewal or replacement.
35
THE R&B FALCON NOTES THE TRANSOCEAN SEDCO FOREX NOTES
-------------------- --------------------------------
Notwithstanding the above, R&B Falcon or any subsidiary may In addition, without securing the debt securities issued under
incur, issue, assume or guarantee indebtedness secured by a the Transocean Sedco Forex indenture as described above,
lien which would otherwise be subject to this provision of Transocean Sedco Forex may create, assume or allow to exist
the R&B Falcon indentures in an aggregate amount which, secured debt that would otherwise be prohibited, in an aggre-
together with all other such indebtedness of R&B Falcon and gate amount that does not exceed a "basket" equal to 10% of
its subsidiaries and their Attributable Indebtedness (as its consolidated net tangible assets. When determining whether
defined below) in respect of Sale/ Leaseback Transactions secured debt is permitted by this exception, Transocean Sedco
(as defined under the caption "Limitation on Sale/Leaseback Forex must include in the calculation of the "basket" amount
Transactions" below), does not at the time exceed 15% of its all of its other secured debt that would otherwise be
consolidated net worth. prohibited and the present value of lease payments in
connection with sale and lease-back transactions that would be
Under the R&B Falcon 9.125%-9.50% notes indenture, this prohibited by the "Limitation on Sale and Lease-Back
provision applies to R&B Falcon and its Restricted Transactions" covenant described below if this exception did
Subsidiaries. not apply.
Under the R&B Falcon 6.50%-7.375% notes indenture, this
provision applies to R&B Falcon and all of its subsidiaries.
Capitalized terms used but not defined in the above
description are defined in the R&B Falcon indentures as
follows:
"Attributable Indebtedness," when used with respect to any
Sale/Leaseback Transaction, means, as of the time of
determination, the present value (discounted at the rate
implicit in the terms of the lease included in such
transaction) of the total obligations of the lessee for
rental payments (other than amounts required to be paid on
account of property taxes, maintenance, repairs, insurance,
assessments, utilities, operating and labor costs and other
items which do not constitute payments for property rights)
during the remaining term of the lease included in such
Sale/Leaseback Transaction (including any period for which
such lease has been extended).
"Restricted Subsidiary" means any Subsidiary that has not
been designated as an unrestricted Subsidiary by the Board
of Directors of R&B Falcon.
"Subsidiary" means with respect to any person (i) any
corporation of which more than 50% of the total voting power
of all classes of the common equity is owned by such person
directly or through one or more other Subsidiaries of such
person, and (ii) any entity other than a corporation at
least a majority of the common equity of which is owned by
such person directly or through one or more other
Subsidiaries of such person.
36
THE R&B FALCON NOTES THE TRANSOCEAN SEDCO FOREX NOTES
-------------------- --------------------------------
LIMITATION ON SALE/LEASEBACK TRANSACTIONS LIMITATION ON SALE/LEASEBACK TRANSACTIONS
R&B Falcon covenants under the R&B Falcon indentures that it Transocean Sedco Forex has agreed that it will not enter into
will not, and will not permit any subsidiary to, enter into a sale and lease-back transaction covering any drilling rig or
any arrangement with any entity (excluding R&B Falcon or any drillship, unless one of the following applies:
subsidiary) providing for the leasing by R&B Falcon or a
subsidiary for a period of more than three years, of any - it could incur debt secured by the leased property in an
real or personal property which property has been or is to amount at least equal to the present value of the lease
be sold or transferred by R&B Falcon or any subsidiary to payments in connection with that sale and lease-back
that entity (a "Sale/Leaseback Transaction"). This transaction without violating the "Limitation on Liens"
restriction does not apply to any Sale/Leaseback Transaction covenant described above, or
if:
- within six months of the effective date of the sale and
- R&B Falcon or such subsidiary would be entitled to incur lease-back transaction, it applies an amount equal to the
indebtedness with respect to the transaction secured by a present value of the lease payments in connection with the
lien on the property to be leased without equally and sale and lease-back transaction to (1) the acquisition of
ratably securing the debt securities in accordance with any drilling rig or drillship or (2) the retirement of
the provisions of the R&B Falcon indentures described long-term debt ranking at least equally with the debt
above under the caption "Limitations on Liens"; securities issued under the indenture.
- within a period commencing six months prior to the In the Transocean Sedco Forex indenture the term "sale and
consummation of the transaction and ending six months lease-back transaction" means any arrangement by which
after consummation of the transaction, R&B Falcon or any Transocean Sedco Forex sells or transfers to any person any
subsidiary, as the case may be, shall have expended for drilling rig or drillship that it then leases back from them.
property used or to be used in the ordinary course of This term excludes leases shorter than three years,
business of R&B Falcon and its subsidiaries an amount intercompany leases, leases executed within 12 months of the
equal to all or a portion of the net proceeds of such acquisition, construction, improvement or commencement of
transaction and R&B Falcon elects to designate such amount commercial operation of the drilling rig or drillship, and
as a credit against the transaction (with any such amount arrangements pursuant to any provision of law with an effect
not being so designated to be applied as set forth in the similar to the former Section 168(f)(8) of the Internal
bullet point below); or Revenue Code of 1954 (which permitted the lessor to recognize
depreciation on the property).
- R&B Falcon, within twelve months after the effective date
of the transaction, applies to the voluntary defeasance or
retirement of the debt securities or any indebtedness that
is pari passu to the debt securities an amount equal to
the greater of the net proceeds of the sale or transfer of
the property leased in the transaction and the fair value,
as determined by the Board of Directors of R&B Falcon, of
such property at the time of entering into such
transaction (in either case adjusted to reflect the
remaining term of the lease and any amount expended by R&B
Falcon as set forth in the second bullet point above),
less the principal amount of debt securities and pari
passu indebtedness voluntarily defeased or retired by R&B
Falcon within such 12-month period and not designated as a
credit against any other sale/leaseback transaction
entered into by R&B Falcon or any Subsidiary during such
period.
37
THE R&B FALCON NOTES THE TRANSOCEAN SEDCO FOREX NOTES
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Under the R&B Falcon 9.125%-9.50% notes indenture, this
provision applies to R&B Falcon and its Restricted
Subsidiaries. Under the R&B Falcon 6.50%-7.375% notes
indenture, this provision applies to R&B Falcon and all of
its subsidiaries.
PROVISION OF FINANCIAL INFORMATION PROVISION OF FINANCIAL INFORMATION
R&B Falcon covenants under the R&B Falcon 6.50%-7.735% notes Under the Transocean Sedco Forex indenture, Transocean Sedco
indenture that it will: Forex does not covenant to provide financial information.
- file with the R&B Falcon trustee and furnish to any holder
of debt securities issued under the R&B Falcon 6.50%-7.735%
notes indenture, within 15 days after filing the same with
the SEC, annual reports and such information, documents and
other reports that R&B Falcon is required to file with the
SEC;
- file with the R&B Falcon trustee and furnish to any holder
of debt securities issued under the R&B Falcon 6.50%-7.735%
notes indenture, within 60 days after the end of each of the
three quarters of each fiscal year, interim reports of R&B
Falcon that R&B Falcon is required to file with the SEC; and
- If R&B Falcon is not subject to the reporting requirements
of Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, file with the R&B Falcon trustee, and
furnish to any holder of debt securities issued under the
R&B Falcon 6.50%-7.735% notes indenture, within 15 days
after R&B Falcon would have been required to file the same
with the SEC, financial statements, including any notes
thereto (and with respect to annual reports, an auditors'
report by a firm of established national reputation), and a
"Management's Discussion and Analysis of Financial
Conditions and Results of Operations."
R&B Falcon covenants under the R&B Falcon 9.125%-9.50% notes
indenture that it will file with the SEC and furnish to the
R&B Falcon trustee and furnish to any holder of debt
securities issued under the R&B Falcon 9.125%-9.50% notes
indenture, within 15 days after filing the same with the SEC,
annual reports and such information, documents and other
reports specified in Sections 13 and 15(d) of the Securities
Exchange Act of 1934, notwithstanding the fact that R&B Falcon
may not remain subject to those reporting requirements.
38
THE R&B FALCON NOTES THE TRANSOCEAN SEDCO FOREX NOTES
-------------------- --------------------------------
LIMITATION ON MERGERS AND CONSOLIDATIONS LIMITATION ON MERGERS AND CONSOLIDATIONS
In general, R&B Falcon may consolidate with or merge into The Transocean Sedco Forex indenture generally permits a
any other entity, or sell, lease, convey, transfer all or consolidation or merger between Transocean Sedco Forex and
substantially all of its assets to any person without the another entity. The indenture also permits the transfer or
consent of the holders of the debt securities issued under disposal of all or substantially all of Transocean Sedco
the R&B Falcon indentures. However, R&B Falcon may not take Forex's assets. Transocean Sedco Forex has agreed, however,
any of these actions unless: that it will consolidate with or merge into any entity, or
transfer or dispose of all or substantially all of our assets
- the successor entity or transferee is a corporation, to any entity, only if:
organized and validly existing, under the laws of the
United States or the District of Columbia and expressly - the resulting entity assumes the due and punctual payment of
assumes, by supplemental indenture, in a form satisfactory the debt securities issued under the Transocean Sedco Forex
to the R&B Falcon trustee, all of the obligations of R&B indenture and the performance of Transocean Sedco Forex's
Falcon under the R&B Falcon indentures and the debt covenants under the indenture, and
securities;
- immediately after giving effect to the transaction, no event
- immediately after giving effect to the transaction, no of default, and no event that, after notice or lapse of
Event of Default (as defined below) shall have occurred time, would become an event of default, would occur and be
and be continuing; continuing.
- in the case of the R&B Falcon 9.125%-9.50% notes indenture If a resulting entity assumes the Transocean Sedco Forex notes
only, immediately after giving effect to the transaction, and the Transocean Sedco Forex indenture as described above,
the surviving person would be able to incur at least $1.00 Transocean Sedco Forex will be relieved of its obligations
of indebtedness under the provisions of the section under the Transocean Sedco Forex notes and Transocean Sedco
entitled "Limitation on Indebtedness"; Forex indenture, except in the case of our transfer or
disposal of assets by lease.
- R&B Falcon delivers to the R&B Falcon trustee an officers'
certificate and opinion of counsel each stating that the
transaction and the supplemental indenture comply with the
applicable provisions of the R&B Falcon indenture.
In the event a successor entity or transferee assumes the
obligations of R&B Falcon, the successor entity or
transferee will succeed to all of the obligations and
responsibilities of, and be substituted for, and may
exercise every right and power of, R&B Falcon under the R&B
Falcon indentures. After the assumption of the obligations
of R&B Falcon, except in the case of a lease, R&B Falcon
will be relieved of all obligations and covenants under the
R&B Falcon indentures and with respect to the debt
securities issued under the R&B Falcon indentures.
39
THE R&B FALCON NOTES THE TRANSOCEAN SEDCO FOREX NOTES
-------------------- --------------------------------
EVENTS OF DEFAULT EVENTS OF DEFAULT
An "Event of Default" is defined in the R&B Falcon The following are events of default with respect to the
indentures with respect to debt securities of any series as Transocean Sedco Forex notes:
being:
- Transocean Sedco Forex's failure to pay interest on or any
- default by R&B Falcon or any guarantor for 30 days in additional amounts with respect to the Transocean Sedco
payment of any interest on the R&B Falcon notes of such Forex notes for 30 days,
series,
- Transocean Sedco Forex's failure to pay principal of or any
- default by R&B Falcon or any guarantor in any payment of premium on the Transocean Sedco Forex notes when due,
principal of or premium, if any, on the R&B Falcon notes
of such series, - Transocean Sedco Forex's failure to perform any of its other
covenants in the Transocean Sedco Forex indenture (other
- default by R&B Falcon or any guarantor in compliance with than a covenant included in the Transocean Sedco Forex
any of its other covenants applicable to the R&B Falcon indenture solely for the benefit of another series of debt
notes of such series or agreements in, or provisions of, securities) for 90 days after written notice by the
the R&B Falcon notes of such series, the guarantees, if Transocean Sedco Forex trustee or by the holders of at least
any, or the R&B Falcon indentures which shall not have 25% in principal amount of all outstanding debt securities
been remedied within 60 days after written notice by the under the Transocean Sedco Forex indenture,
R&B Falcon trustee or by the holders of at least 25% in
principal amount of each series of R&B Falcon notes then - various events involving a bankruptcy, insolvency or
outstanding, reorganization of Transocean Sedco Forex, and
- the acceleration of the maturity of any indebtedness - any other event of default provided for with respect to the
(other than of R&B Falcon notes of such series or any Transocean Sedco Forex notes.
non-recourse indebtedness) of R&B Falcon or any subsidiary
of R&B Falcon having an outstanding principal amount of A default under the Transocean Sedco Forex indenture with
$20 million or more individually or in the aggregate, or a respect to one series of debt securities issued under the
default in the payment of any principal or interest in indenture will not necessarily be a default with respect to
respect of any indebtedness (other than the R&B Falcon another series. The Transocean Sedco Forex trustee may
notes of such series or any non-recourse indebtedness) of withhold notice to the holders of the Transocean Sedco Forex
R&B Falcon or any subsidiary of R&B Falcon having an out- notes of any default or event of default (except for a default
standing principal amount of $20 million or more in any payment on the Transocean Sedco Forex notes) if the
individually or in the aggregate and such default shall be Transocean Sedco Forex trustee considers it in the interest of
continuing for a period of 30 days without R&B Falcon or the holders of the Transocean Sedco Forex notes to do so.
such subsidiary, as the case may be, effecting a cure of
such default, In the case of an event of default with respect to the
Transocean Sedco Forex notes, the Transocean Sedco Forex
- a final judgment or order for the payment of money in trustee or the holders of at least 25% in principal amount of
excess of $20 million (net of applicable insurance the series of the Transocean Sedco Forex notes affected by the
coverage) having been rendered against R&B Falcon, a default (or, in some cases, of all outstanding debt securities
guarantor or any Significant Subsidiary of R&B Falcon and under the indenture, voting as a class) may declare the
such judgment or order shall continue unsatisfied and principal of those Transocean Sedco Forex notes to be due and
unstayed for a period of 60 days, or payable immediately. If an event of default relating to events
of bankruptcy, insolvency or reorganization occurs, the
- certain events involving bankruptcy, insolvency or principal of the Transocean Sedco Forex notes will become
reorganization of R&B Falcon, a guarantor, or any immediately due and payable without any action on the part of
Significant Subsidiary of R&B Falcon. the Transocean Sedco Forex trustee or any holder. The holders
of a
The R&B Falcon indentures provide that the R&B Falcon
trustee may withhold notice to the holders of the R&B Falcon
notes of any default (except in payment of principal of or
premium, if any, or
40
THE R&B FALCON NOTES THE TRANSOCEAN SEDCO FOREX NOTES
-------------------- --------------------------------
interest on the R&B Falcon notes) if the R&B Falcon trustee majority in principal amount of the outstanding Transocean
considers it in the interest of the holders of the R&B Sedco Forex notes affected by the default (or, in some cases,
Falcon notes to do so. of all outstanding debt securities under the indenture, voting
as one class) may in some cases rescind this accelerated
If an Event of Default occurs and is continuing with respect payment requirement. Depending on the terms of Transocean
to the R&B Falcon indentures (other than certain events of Sedco Forex's other indebtedness, an event of default under
bankruptcy, insolvency or reorganization) with respect to the Transocean Sedco Forex indenture may give rise to cross
any series of R&B Falcon notes, the R&B Falcon trustee or defaults on its other indebtedness.
the holders of not less than 25% in principal amount of such
series of R&B Falcon notes outstanding may declare the In most cases, the Transocean Sedco Forex trustee will be
principal of and premium, if any, and accrued but unpaid under no obligation to exercise any of its rights or powers
interest on all the R&B Falcon notes of such series to be under the Transocean Sedco Forex indenture at the request or
due and payable. Upon such a declaration, such principal, direction of any of the holders, unless those holders have
premium, if any, and interest will be due and payable offered to the Transocean Sedco Forex trustee reasonable
immediately. indemnity. The holders of a majority in principal amount of
any series of Transocean Sedco Forex notes (or, in some cases,
If an Event of Default relating to certain events of of all outstanding debt securities under the indenture) may
bankruptcy, insolvency or reorganization occurs and is direct the time, method and place of:
continuing, the principal of and premium, if any, and
interest on all the R&B Falcon notes will become and be - conducting any proceeding for any remedy available to that
immediately due and payable without any declaration or other series of Transocean Sedco Forex trustee, or
act on the part of the R&B Falcon trustee or any holders of
the R&B Falcon notes. - exercising any trust or power conferred on the Transocean
Sedco Forex trustee with respect to that series of
The amount due and payable on the acceleration of any R&B Transocean Sedco Forex notes.
Falcon note will be equal to 100% of the principal amount of
such note, plus accrued interest to the date of payment. In the case of an event of default, the Transocean Sedco Forex
trustee will be required to use the degree of care and skill
Under certain circumstances, the holders of a majority in of a prudent man in the conduct of his own affairs.
principal amount of the outstanding R&B Falcon notes of any
series may rescind any such acceleration with respect to the A holder of Transocean Sedco Forex notes may not individually
R&B Falcon notes of such series and its consequences. pursue any remedy under the Transocean Sedco Forex indenture
unless all of the following conditions are met:
No holder of a R&B Falcon note of any series may pursue any
remedy under the R&B Falcon indentures unless: - the holder has previously given written notice to the
trustee of an event of default with respect to that series
- the R&B Falcon trustee shall have received written notice of Transocean Sedco Forex notes,
of a continuing Event of Default,
- the holders of not less than 25% in principal amount of the
- the R&B Falcon trustee shall have received a request from Transocean Sedco Forex notes of that series have made a
holders of at least 25% in principal amount of such series written request to the Transocean Sedco Forex trustee to
of R&B Falcon notes to pursue such remedy, institute proceedings in its own name,
- the R&B Falcon trustee shall have been offered indemnity - the holder has offered the trustee reasonable indemnity,
reasonably satisfactory to it,
- the Transocean Sedco Forex trustee has failed to act within
- the R&B Falcon trustee shall have failed to act for a 60 days after receipt of the notice and indemnity, and
period of 60 days after receipt of such notice and offer
of indemnity; however, such provision does not affect the - the holders of a majority in principal amount of the
right of a holder of a R&B Falcon note to sue for outstanding Transocean Sedco Forex notes
enforcement of any overdue payment thereon, and
- during the 60 day period a majority of holders do
41
THE R&B FALCON NOTES THE TRANSOCEAN SEDCO FOREX NOTES
-------------------- --------------------------------
not give the R&B Falcon trustee a direction inconsistent of that series have given no direction inconsistent with the
with the request. request.
The holders of a majority in principal amount of any series The foregoing limitations with respect to remedies do not,
of the R&B Falcon notes then outstanding have the right to however, affect the right of a holder of any Transocean Sedco
direct the time, method and place of conducting any Forex note to sue for the enforcement of any overdue payment.
proceeding for exercising any remedy available to the R&B
Falcon trustee under the R&B Falcon indentures, subject to
certain limitations specified in the R&B Falcon indenture
with respect to such series.
The R&B Falcon indentures require the annual filing by R&B
Falcon with the R&B Falcon trustee of a written statement as
to compliance with the covenants contained in the R&B Falcon
indentures.
Capitalized terms used but not defined in the above
description are defined in the R&B Falcon indentures as
follows:
"Significant Subsidiary" has the meaning set forth in
Regulation S-X under the Securities Exchange Act of 1934, as
amended.
Under the R&B Falcon 9.125%-9.50% notes indenture, the
provisions described above apply to the acceleration of
indebtedness of R&B Falcon, any guarantors and any
Significant Subsidiary of R&B Falcon that is a Restricted
Subsidiary. Under the R&B Falcon 6.50%-7.375% notes
indenture, these provisions generally apply to R&B Falcon
and all of its subsidiaries and, in some cases, R&B Falcon
and its Significant Subsidiaries.
SATISFACTION AND DISCHARGE OF THE INDENTURES; DEFEASANCE AND SATISFACTION AND DISCHARGE OF THE INDENTURE; DEFEASANCE AND
COVENANT DEFEASANCE COVENANT DEFEASANCE
R&B Falcon and the guarantors, if any, may terminate certain Under the Transocean Sedco Forex indenture, the term
of their obligations under the R&B Falcon indentures with "defeasance" means discharge from some or all of Transocean
respect to R&B Falcon notes of any series, including those Sedco Forex's obligations under the Transocean Sedco Forex
described under the section "Certain Covenants," if: indenture. If Transocean Sedco Forex deposits with the
Transocean Sedco Forex trustee money or U.S. government
- R&B Falcon irrevocably deposits in trust with the R&B Falcon securities sufficient to make payments on the Transocean Sedco
trustee cash or non-callable U.S. Government Obligations or Forex notes of a series on the dates those payments are due
a combination thereof sufficient to pay principal of and and payable, then at its option either of the following will
interest on such series of R&B Falcon notes to maturity, and occur:
to pay all other sums payable by it under the R&B Falcon
indentures; - Transocean Sedco Forex will no longer have any obligation to
the holders of the Transocean Sedco Forex notes of that
- no default or Event of Default shall have occurred and be series to comply with the restrictive covenants under the
continuing on the date of such deposit; Transocean Sedco Forex indenture, and the related events of
default will no longer apply to Transocean Sedco Forex
- R&B Falcon shall have delivered to the R&B Falcon trustee an ("covenant defeasance"), but its other obligations under the
opinion of counsel acceptable to the R&B Falcon trustee or a Transocean Sedco Forex indenture and the Transocean Sedco
tax ruling to the Forex
42
THE R&B FALCON NOTES THE TRANSOCEAN SEDCO FOREX NOTES
-------------------- --------------------------------
effect that the holders of the R&B Falcon notes of such notes of that series, including its obligations to make
series will not recognize income, gain or loss for Federal payments on the Transocean Sedco Forex notes of that series,
income tax purposes as a result of R&B Falcon's exercise to register the transfer or exchange of the Transocean Sedco
of its option under such section and will be subject to Forex notes of that series, to replace stolen, lost or
Federal income tax on the same amount and in the same mutilated Transocean Sedco Forex notes of that series, to
manner and at the same times as would have been the case maintain paying agencies and to hold monies for payment in
if such option had not been exercised; trust, will continue, or
- R&B Falcon delivers to the R&B Falcon trustee certain - Transocean Sedco Forex will be discharged from all of its
other documents called for by the R&B Falcon indenture, obligations with respect to the Transocean Sedco Forex notes
including an officers' certificate and opinions of of that series ("legal defeasance and discharge") and
counsel; and holders of the Transocean Sedco Forex notes of that series
would be entitled to claim payments on their debt securities
- R&B Falcon satisfies other conditions. only from the trust fund.
R&B Falcon's payment obligations and the guarantors' Transocean Sedco Forex will be required to deliver to the
guarantees, if any, shall survive until the R&B Falcon notes Transocean Sedco Forex trustee an opinion of counsel that the
are no longer outstanding. deposit and related defeasance would not cause the holders of
the Transocean Sedco Forex notes to recognize income, gain or
The R&B Falcon indentures provide that the indenture shall loss for U.S. federal income tax purposes. If Transocean Sedco
cease to be of further effect with respect to R&B Falcon Forex elects legal defeasance and discharge, that opinion of
notes of any series (subject to certain exceptions relating counsel must be based upon a ruling from the U.S. Internal
to compensation and indemnity of the R&B Falcon trustee and Revenue Service or a change in law to that effect.
repayment to R&B Falcon of excess money or securities) when:
- either all outstanding R&B Falcon notes of such series
theretofore authenticated and issued (other than
destroyed, lost or stolen R&B Falcon notes that have been
replaced or paid) have been delivered to the R&B Falcon
trustee for cancellation; or all outstanding R&B Falcon
notes of such series not theretofore delivered to the R&B
Falcon trustee for cancellation (1) have become due and
payable or (2) will become due and payable at their stated
maturity within one year and R&B Falcon has deposited or
caused to be deposited with the R&B Falcon trustee as
funds (immediately available to the holders in the case of
clause (1)) in trust for such purpose an amount which,
together with earnings thereon, will be sufficient to pay
and discharge the entire indebtedness on such R&B Falcon
notes of such series for principal and interest to the
date of such deposit (in the case of R&B Falcon notes of
such series which have become due and payable) or to the
stated maturity, as the case may be;
- R&B Falcon has paid all other sums payable by it under the
R&B Falcon indenture; and
- R&B Falcon has delivered to the R&B Falcon trustee an
officers' certificate stating that all conditions
precedent to satisfaction and discharge of the R&B Falcon
indenture have been
43
THE R&B FALCON NOTES THE TRANSOCEAN SEDCO FOREX NOTES
-------------------- --------------------------------
complied with, together with an opinion of counsel to the
same effect.
Capitalized terms used but not defined in the above
description are defined in the R&B Falcon indentures as
follows:
"U.S. Government Obligations" means direct obligations of
the United States of America for the payment of which the
full faith and credit of the United States of America is
pledged.
AMENDMENT, MODIFICATION AND WAIVER AMENDMENT, MODIFICATION AND WAIVER
R&B Falcon, the guarantors, if any, and the R&B Falcon trustee Transocean Sedco Forex may modify or amend the Transocean
may make modifications and amendments to the R&B Falcon Sedco Forex indenture if the holders of a majority in
indentures or the R&B Falcon notes with the consent of the principal amount of the outstanding debt securities of all
holders of a majority in principal amount of each series of series issued under the Transocean Sedco Forex indenture (act-
the R&B Falcon notes then outstanding; provided that no such ing as one class) affected by the modification or amendment
modification or amendment may, without the consent of the consent to it. Without the consent of the holder of each
holder of each R&B Falcon note then outstanding affected outstanding debt security affected, however, no modification
thereby of any series: may:
- reduce the amount of R&B Falcon notes of such series whose - change the stated maturity of the principal of or any
holders must consent to an amendment, supplement or waiver; installment of principal of or interest on any debt
security,
- reduce the rate of or change the time for payment of
interest, including default interest, on any R&B Falcon note - reduce the principal amount of, the interest rate on, any
of such series; additional amount with respect to or the premium payable
upon redemption of any debt security,
- reduce the principal of or change the fixed maturity of any
R&B Falcon note of such series or alter the premium or other - make the debt security payable in a currency other than
provisions with respect to redemption; originally stated in the debt security,
- make any R&B Falcon note payable in money other than that - change the place where the principal of, any additional
stated in the R&B Falcon note of such series; amounts with respect to or any premium or interest on any
debt security is payable,
- impair the right to institute suit for the enforcement of
any payment of principal of, or premium, if any, or interest - impair the right to institute suit for the enforcement of
on, any R&B Falcon note of such series; any payment on any debt security,
- make any change in the percentage of principal amount of R&B - reduce the percentage in principal amount of outstanding
Falcon notes necessary to waive compliance with certain debt securities necessary to modify the Transocean Sedco
provisions of the R&B Falcon indentures; or Forex indenture, waive compliance with the provisions of the
Transocean Sedco Forex indenture or waive defaults, or
- waive a continuing default or Event of Default in the
payment of principal of, or premium, if any, or interest on - modify any of the above provisions.
the R&B Falcon notes of such series.
Transocean Sedco Forex and the Transocean Sedco Forex trustee
R&B Falcon, the guarantors, if any, and the R&B Falcon trustee may agree to modify, amend or supplement the Transocean Sedco
may make modifications and amendments of the R&B Falcon Forex indenture without the consent of any holders of the
indentures without the consent of any holders of R&B Falcon Transocean Sedco Forex notes in certain circumstances,
notes in certain limited circumstances, including: including:
- to evidence the assumption of its obligations under the
Transocean Sedco Forex indenture and the debt securities
issued under the Transocean Sedco Forex indenture by a
successor,
44
THE R&B FALCON NOTES THE TRANSOCEAN SEDCO FOREX NOTES
-------------------- --------------------------------
- to cure any ambiguity, omission, defect or incon-
sistency; - to add covenants or events of default or to surrender any of
its rights under the Transocean Sedco Forex indenture,
- to provide for the assumption of the obligations of R&B
Falcon or any guarantor under the R&B Falcon indentures - to provide security for any series of debt securities issued
upon the merger, consolidation or sale or other under the Transocean Sedco Forex indenture,
disposition of all or substantially all of the assets of
R&B Falcon or any such guarantor; - to make any change that does not adversely affect any
outstanding debt securities of a series,
- to provide for uncertificated R&B Falcon notes in addition
to or in place of certificated R&B Falcon notes; - to establish the terms of any series of debt securities,
- to reflect the release of any guarantor from its - to add provisions necessary to permit or facilitate
guarantee, or the addition of any subsidiary of R&B Falcon defeasance of any series of debt securities if Transocean
as a guarantor, in the manner provided by the R&B Falcon Sedco Forex has received an opinion of counsel that those
indentures; provisions do not materially adversely affect the holders of
any series of debt securities,
- to comply with any requirement in order to effect or
maintain the qualification of the R&B Falcon indentures - to provide for a successor trustee, or
under the Trust Indenture Act of 1939;
- to cure any ambiguity, defect or inconsistency.
- to add guarantees of the securities;
The holders of a majority in principal amount of the
- to comply with any requirements of the SEC in connection outstanding Transocean Sedco Forex notes of any series (or, in
with qualifying the R&B Falcon indentures under the Trust some cases, of all outstanding debt securities under the
Indenture Act; Transocean Sedco Forex indenture or of all series affected)
may waive past defaults under the Transocean Sedco Forex
- to add to the covenants of R&B Falcon or any guarantor for indenture and compliance by Transocean Sedco Forex with its
the benefit of the holders or to surrender any power covenants under the Transocean Sedco Forex indenture. Those
conferred upon R&B Falcon or any guarantor; or holders may not, however, waive any default in any payment on
any debt security of that series or compliance with a provi-
- to make any change that does not adversely affect the sion that cannot be modified or amended without the consent of
rights of any holder of R&B Falcon notes in any material each holder affected.
respect.
LIMITATION ON INDEBTEDNESS LIMITATION ON INDEBTEDNESS
See "Limitation on Indebtedness in the R&B Falcon 9.125%-9.50% There is no comparable provision under the Transocean Sedco
Notes Indenture" below. Forex indenture.
LIMITATION ON RESTRICTED PAYMENTS LIMITATION ON RESTRICTED PAYMENTS
See "Limitation on Restricted Payments in the R&B Falcon There is no comparable provision under the Transocean Sedco
9.125%-9.50% Notes Indenture" below. Forex indenture.
GOVERNING LAW GOVERNING LAW
The laws of the State of New York govern or will govern the
The laws of the State of New York govern the R&B Falcon Transocean Sedco Forex indenture and the debt securities
indentures and the debt securities issued under the issued or to be issued under the indenture. See "Description
indentures. of the Transocean Notes -- Governing Law."
45
LIMITATION ON INDEBTEDNESS IN THE R&B FALCON 9.125%-9.50% NOTES INDENTURE
The provision described below is contained only in the R&B Falcon
9.125%-9.50% notes indenture. In the event that at any time (1) the ratings
assigned to the notes by both Moody's and Standard & Poor's are both investment
grade ratings and (2) no default has occurred and is continuing under the R&B
Falcon 9.125%-9.50% notes indenture, R&B Falcon and its Restricted Subsidiaries
will no longer be subject to the provision of the R&B Falcon 9.125%-9.50% notes
indenture described below, so long as the investment grade ratings are
maintained. R&B Falcon presently maintains an investment grade rating.
Therefore, the provision described below is currently suspended.
R&B Falcon covenants under the R&B Falcon 9.125%-9.50% notes indenture that
it will not, and will not permit any Restricted Subsidiary to, incur, directly
or indirectly, any indebtedness unless its pro forma consolidated EBITDA
coverage ratio at the date of such incurrence exceeds 2.25 to 1.0.
Incurrence of the following indebtedness is not restricted by this
covenant:
- Indebtedness of R&B Falcon pursuant to its credit facilities, and the
guarantee of this indebtedness by Restricted Subsidiaries, that the
aggregate amount of this indebtedness outstanding does not exceed $350
million.
- Indebtedness of R&B Falcon or a Restricted Subsidiary owed to and held by
a Restricted Subsidiary or indebtedness of a Restricted Subsidiary owed
to and held by R&B Falcon. However, any subsequent issuance or transfer
of any capital stock that results in the Restricted Subsidiary to whom
indebtedness is owed ceasing to be a Restricted Subsidiary or any
transfer of the indebtedness (other than to R&B Falcon or another
Restricted Subsidiary) will be deemed, in each case, to constitute the
incurrence of such indebtedness.
- The R&B Falcon notes and indebtedness incurred in exchange for, or the
proceeds of which are used to refund or refinance, any indebtedness
permitted by these provisions if (1) the principal amount of the
indebtedness so incurred does not exceed the principal amount of the
indebtedness so exchanged, refunded or refinanced (plus the amount of
reasonable related fees and expenses, including any premium or defeasance
costs) and (2) the indebtedness so incurred (A) does not mature prior to
the stated maturity of the indebtedness so exchanged, refunded or
refinanced and (B) has an average life equal to or greater than the
remaining average life of the indebtedness so exchanged, refunded or
refinanced.
- Indebtedness of R&B Falcon or any Restricted Subsidiary (other than
indebtedness described in the first three bullet points above) (1)
outstanding on the issue date or incurred pursuant to agreements as in
effect on the issue date and (2) indebtedness incurred in exchange for,
or the proceeds of which are used to refund or refinance, any
indebtedness permitted by this provision or permitted by the provision
described in the first bullet point above; if (A) the principal amount of
the indebtedness so incurred does not exceed the principal amount of the
indebtedness so exchanged, refunded or refinanced (plus the amount of
reasonable related fees and expenses, including any premium or defeasance
costs); and (B) the indebtedness so incurred (i) does not mature prior to
the stated maturity of the indebtedness so exchanged, refunded or
refinanced and (ii) has an average life equal to or greater than the
remaining average life of the indebtedness so exchanged, refunded or
refinanced.
- Indebtedness of R&B Falcon or any Restricted Subsidiary consisting of
guarantees in connection with any synthetic lease obligations of persons
incurred to finance the construction or upgrade of the drillship
Deepwater Frontier and the drillship Pathfinder pursuant to agreements
governing such obligations.
46
- Acquired indebtedness of any Restricted Subsidiary in an aggregate amount
not to exceed $300 million, if R&B Falcon on a pro forma basis could
incur $1.00 of additional indebtedness pursuant to the EBITDA coverage
ratio test of this covenant.
- Indebtedness of R&B Falcon or any Restricted Subsidiary consisting of
guarantees, indemnities or obligations in respect of purchase price
adjustments in connection with the acquisition or disposition of assets,
including shares of capital stock.
- The incurrence by R&B Falcon's unrestricted Subsidiaries of non-recourse
indebtedness. If any of this indebtedness ceases to be non-recourse
indebtedness of any unrestricted Subsidiary, this event will be deemed to
constitute an incurrence of indebtedness by a Restricted Subsidiary of
R&B Falcon that was not permitted by this provision.
- Obligations of R&B Falcon or a Restricted Subsidiary under performance or
surety bonds relating to building contracts for the construction of
drilling rigs, drillships or similar vessels or contracts for the
installation of related equipment.
- Hedging obligations.
- Indebtedness of R&B Falcon or any Restricted Subsidiary in an aggregate
principal amount which, together with all other indebtedness of R&B
Falcon then outstanding (other than indebtedness permitted by the
preceding bullet points) does not exceed $50 million;
R&B Falcon is not permitted to issue any indebtedness if the proceeds are used,
directly or indirectly, to repay, prepay, redeem, defease, retire, refund or
refinance any subordinated obligations unless such indebtedness will be
subordinated to the R&B Falcon notes to at least the same extent as the
subordinated obligations.
LIMITATION ON RESTRICTED PAYMENTS IN THE R&B FALCON 9.125%-9.50% NOTES INDENTURE
The provision described below is contained only in the R&B Falcon
9.125%-9.50% notes indenture. In the event that at any time (1) the ratings
assigned to the notes by both Moody's and Standard & Poor's are both investment
grade ratings and (2) no default has occurred and is continuing under the R&B
Falcon 9.125%-9.50% notes indenture, R&B Falcon and its Restricted Subsidiaries
will no longer be subject to the provision of the R&B Falcon 9.125%-9.50% notes
indenture described below, so long as the investment grade ratings are
maintained. R&B Falcon presently maintains an investment grade rating.
Therefore, the provision described below is currently suspended.
R&B Falcon covenants under the R&B Falcon 9.125%-9.50% notes indenture that
it will not, and will not permit any Restricted Subsidiary, directly or
indirectly, to declare or pay any dividend or make any distribution on or in
respect of its capital stock (including any payment in connection with any
merger or consolidation involving R&B Falcon) or to the direct or indirect
holders of its capital stock:
- purchase, redeem or otherwise acquire or retire for value any capital
stock of R&B Falcon or of any direct or indirect parent of R&B Falcon, or
any Restricted Subsidiary, except capital stock held by R&B Falcon or a
Restricted Subsidiary,
- purchase, repurchase, redeem, defease or otherwise acquire or retire for
value, prior to scheduled maturity, scheduled repayment or scheduled
sinking fund payment, any subordinated obligations, other than the
purchase, repurchase or other acquisition of subordinated obligations
purchased in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due within one year
of the date of acquisition,
- make certain investments,
47
(any such dividend, distribution, purchase, redemption, repurchase, defeasance,
other acquisition, retirement or investment being herein referred to as a
"Restricted Payment") if at the time R&B Falcon or such Restricted Subsidiary
makes such Restricted Payment:
- a default has occurred and is continuing (or would result from the
Restricted Payment), or
- R&B Falcon would not be permitted to incur an additional $1.00 of
indebtedness pursuant to the EBITDA coverage ratio test of the limitation
on indebtedness covenant in the R&B Falcon 9.125%-9.50% notes indenture
after giving pro forma effect to such Restricted Payment, or
- the aggregate amount of the Restricted Payment and all other Restricted
Payments since the date on which the R&B Falcon notes were originally
issued would exceed the sum of:
- 50% of its consolidated net income accrued during the period, treated
as one accounting period, from the beginning of the fiscal quarter
during which the R&B Falcon notes were originally issued to the end of
the most recent fiscal quarter ending at least 45 days prior to the
date of the Restricted Payment or, in case the consolidated net income
is a deficit, minus 100% of such deficit,
- 100% of the aggregate net proceeds (including the fair market value of
non-cash proceeds, which are to be determined in good faith by the
Board of Directors of R&B Falcon) received by R&B Falcon from the
issue or sale of its capital stock (other than redeemable stock or
exchangeable stock) subsequent to the issue date, other than an
issuance or sale to a Restricted Subsidiary or an employee stock
ownership plan or similar trust,
- the amount by which indebtedness of R&B Falcon is reduced on R&B
Falcon's balance sheet upon the conversion or exchange (other than by
a Restricted Subsidiary) subsequent to the incurrence of any
indebtedness of R&B Falcon convertible or exchangeable for capital
stock (other than redeemable stock or exchangeable stock) of R&B
Falcon, less the amount of any cash, or other property, distributed by
R&B Falcon upon such conversion or exchange,
- to the extent not otherwise included in consolidated net income, the
net reduction in investments in unrestricted Subsidiaries resulting
from dividends, repayments of loans or advances, or other transfers of
assets, in each case to R&B Falcon or any Restricted Subsidiary after
the issue date from any unrestricted Subsidiary or from the
redesignation of an unrestricted Subsidiary as a Restricted
Subsidiary, not to exceed in the case of any Restricted Subsidiary the
total amount of investments (other than investments permitted under
the terms of the R&B Falcon 9.125%-9.50% notes indenture) in such
Restricted Subsidiary made by R&B Falcon and its Restricted
Subsidiaries in such unrestricted Subsidiary after the issue date, and
- $20 million.
The provisions of this section do not prohibit:
- any dividends or distributions payable solely in its non-convertible
capital stock or in options, warrants or other rights to purchase its
non-convertible capital stock,
- any dividends or distributions payable to R&B Falcon or a Restricted
Subsidiary,
- any pro rata dividends or distributions on the capital stock of a
Restricted Subsidiary held by minority stockholders, including minority
stockholders of Arcade Drilling AS, a Norwegian corporation,
- any purchase or redemption of capital stock or subordinated obligations
of R&B Falcon made by exchange for, or out of the proceeds of the
substantially concurrent sale of,
48
capital stock of R&B Falcon (other than redeemable stock or exchangeable
stock and other than capital stock issued or sold to a Restricted
Subsidiary or an employee stock ownership plan). The purchase or
redemption will be excluded in the calculation of the amount of
Restricted Payments and the net cash proceeds from the sale will be
excluded from any calculation of aggregate net proceeds from the sale of
capital stock and the calculation of the reduction of indebtedness on R&B
Falcon's balance sheet for indebtedness convertible into capital stock
mentioned in "Limitations on Indebtedness in the R&B Falcon 9.125%-9.50%
Notes Indenture",
- any purchase or redemption of subordinated obligations of R&B Falcon made
by exchange for, or out of the proceeds of the substantially concurrent
sale of, indebtedness of R&B Falcon which is permitted to be issued
pursuant to the provisions of Section 3.09 of the R&B Falcon 9.125%-9.50%
notes indenture, "Limitations on Indebtedness." The purchase or
redemption will be excluded in the calculation of the amount of
Restricted Payments, or
- any dividends paid within 60 days after the date of declaration if at the
date of declaration the dividend would have complied with this provision;
if at the time of payment of the dividend, no other default has occurred
and is continuing (or would result from the dividend). The dividend shall
be included in the calculation of the amount of Restricted Payments.
49
THE PROPOSED AMENDMENTS
Transocean Sedco Forex is soliciting the consent of the holders of R&B
Falcon notes to (1) eliminate some covenants in the R&B Falcon indentures, (2)
eliminate some restrictions on R&B Falcon's ability to consolidate, merge or
sell all or substantially all of its assets and (3) eliminate some events of
default under the R&B Falcon indentures.
The descriptions below of the provisions of the R&B Falcon indentures to be
eliminated or modified do not purport to be complete and are qualified in their
entirety by reference to the R&B Falcon indentures and the forms of supplemental
indentures to the R&B Falcon indentures that contain the proposed amendments
with respect to each series of the R&B Falcon notes (and that is to be executed
by R&B Falcon and the R&B Falcon trustee in the event the required consents are
obtained). The forms of supplemental indentures have been filed as exhibits to
the registration statement of which this prospectus and consent solicitation
statement forms a part and are available from the Information Agent upon
request. See "Where You Can Find More Information" for information as to how you
can obtain a copy of the R&B Falcon indentures, the forms of supplemental
indentures and the Transocean Sedco Forex indenture from the SEC.
PROVISIONS TO BE DELETED
THE R&B FALCON 6.50%-7.375% NOTES INDENTURE
Transocean Sedco Forex is proposing to delete the following covenants from
the R&B Falcon indenture for the 6.50%, 6.75%, 6.95% and 7.375% R&B Falcon
notes:
(1) The covenant in Section 3.03 entitled "SEC Reports; Financial
Statements," which is described above under "Description of Differences
Between the R&B Falcon Notes and the Transocean Sedco Forex
Notes -- Provision of Financial Information." In this regard, Transocean
Sedco Forex may, if the exchange offers are consummated, file an
application (on Form 15) to the SEC to deregister the R&B Falcon common
stock under the Securities Exchange Act of 1934, as amended. As a result of
such deregistration and the effectiveness of the proposed amendments, R&B
Falcon will no longer be obligated to file periodic reports with the SEC or
deliver periodic reports to the holders of R&B Falcon debt.
(2) The covenant in Section 3.05 entitled "Corporate Existence." Under
Section 3.05, R&B Falcon covenants to preserve its corporate existence and
the corporate, partnership or other existence of its subsidiaries.
(3) The covenant in Section 3.06 entitled "Maintenance of Properties."
Under Section 3.06, R&B Falcon covenants to maintain in good condition,
repair and working order all properties owned or leased or used in the
conduct of its business or the business of any subsidiary.
(4) The covenant in Section 3.07 entitled "Payment of Taxes and Other
Claims." Under Section 3.07, R&B Falcon covenants to pay or discharge,
before the same become delinquent, (a) all material taxes, assessments and
governmental charges levied or imposed upon R&B Falcon or any subsidiary or
upon the income, profits or property of R&B Falcon or any subsidiary, and
(b) all lawful claims for labor, materials and supplies which, if unpaid,
might by law become a lien upon the property of R&B Falcon or any
subsidiary.
(5) The covenant in Section 3.09 entitled "Limitation on
Sale/Leaseback Transactions," which is described above under "Description
of Differences Between the R&B Falcon Notes and the Transocean Sedco Forex
Notes -- Limitation on Sale/Leaseback Transactions."
(6) The covenant in Section 3.10 entitled "Limitation on Liens," which
is described above under "Description of Differences Between the R&B Falcon
Notes and the Transocean Sedco Forex Notes -- Limitation on Liens."
50
(7) The covenant in Section 4.01 entitled "Limitations on Mergers and
Consolidations," which is described above under "Description of Differences
Between the R&B Falcon Notes and the Transocean Sedco Forex
Notes -- Limitations on Mergers and Consolidations."
(8) The covenant in Section 4.02 entitled "Successor Corporation
Substituted." Under Section 4.02, the successor to a consolidation, merger
or sale of substantially all of the assets of R&B Falcon succeeds to R&B
Falcon's obligations under the R&B Falcon indenture.
In conjunction with the deletion of the covenants identified above,
Transocean Sedco Forex is proposing to delete the following defined terms in the
indenture, which are used only in those covenants or in other defined terms
being deleted: "Attributable Indebtedness," "Consolidated Net Worth,"
"Indebtedness," and "Sale/Leaseback Transactions".
Transocean Sedco Forex is also requesting a waiver with respect to any
default, event of default or other consequence under the R&B Falcon indenture of
failing to comply with the terms of the covenants identified above (whether
before or after the date of the supplemental indenture) and to delete clauses
(4), (5), (6) and (7) from the definition of "Event of Default" in Section 5.01,
"Events of Default." These clauses provide, respectively, that each of the
following constitutes an "event of default":
- a default that results in the acceleration of any debt of R&B Falcon or
any of its subsidiaries having an outstanding principal amount of $20
million or more, either individually or in the aggregate with other debt
that has been accelerated,
- a final judgment or order for payment of money in excess of $20 million
is rendered against R&B Falcon, any guarantor under the indenture, or any
"significant subsidiary" (as such term is defined in Regulation X under
the Securities Exchange Act of 1934, as amended) of R&B Falcon and such
judgment or order continues unsatisfied and unstayed for a period of 60
days,
- R&B Falcon, any guarantor under the indenture, or any significant
subsidiary of R&B Falcon, pursuant to or within the meaning of Title 11,
U.S. Code or any similar federal, state or foreign law for the relief of
debtors, commences to a voluntary case, consents to the entry of an order
for relief against it in an involuntary case, consents to the appointment
of a receiver, trustee, assignee, liquidator or similar official under
bankruptcy law for it or for all or a substantial part of its property,
or makes a general assignment for the benefit of its creditors, and
- a court of competent jurisdiction enters an order or decree under Title
11, U.S. Code or any similar federal, state or foreign law for the relief
of debtors that remains unstayed and in effect for 60 days and that is
for relief against R&B Falcon, any guarantor under the indenture, or any
significant subsidiary of R&B Falcon; appoints a receiver, trustee,
assignee, liquidator or similar official under bankruptcy law for or for
all or a substantial part of the property of R&B Falcon, any guarantor
under the indenture, or any significant subsidiary of R&B Falcon, or
orders the liquidation of, R&B Falcon, any guarantor under the indenture
or any significant subsidiary of R&B Falcon.
THE R&B FALCON 9.125%-9.50% NOTES INDENTURE
Transocean Sedco Forex is proposing to delete the following covenants from
the R&B Falcon indenture for the 9.125% and 9.50% R&B Falcon notes:
(1) The covenant in Section 3.03 entitled "SEC Reports; Financial
Statements," which is described above under "Description of Differences
Between the R&B Falcon Notes and the Transocean Sedco Forex
Notes -- Provision of Financial Information." In this regard, Transocean
Sedco Forex may, if the exchange offers are consummated, file an
application
51
(on Form 15) to the SEC to deregister the R&B Falcon common stock under the
Securities Exchange Act of 1934, as amended. As a result of such
deregistration and the effectiveness of the proposed amendments, R&B Falcon
will no longer be obligated to file periodic reports with the Commission or
deliver periodic reports to the holders of R&B Falcon debt.
(2) The covenant in Section 3.05 entitled "Corporate Existence." Under
Section 3.05, R&B Falcon covenants to preserve its corporate existence and
the corporate, partnership or other existence of its subsidiaries.
(3) The covenant in Section 3.06 entitled "Maintenance of Properties."
Under Section 3.06, R&B Falcon covenants to maintain in good condition,
repair and working order all properties owned or leased or used in the
conduct of its business or the business of any subsidiary.
(4) The covenant in Section 3.07 entitled "Payment of Taxes and Other
Claims." Under Section 3.07, R&B Falcon covenants to pay or discharge,
before the same become delinquent, (a) all material taxes, assessments and
governmental charges levied or imposed upon R&B Falcon or any subsidiary or
upon the income, profits or property of R&B Falcon or any subsidiary, and
(b) all lawful claims for labor, materials and supplies which, if unpaid,
might by law become a lien upon the property of R&B Falcon or any
subsidiary.
(5) The covenant in Section 3.09 entitled "Limitation on
Indebtedness," which is described above under "Description of Differences
Between the R&B Falcon Notes and the Transocean Sedco Forex Notes --
Limitation on Indebtedness."
(6) The covenant in Section 3.10 entitled "Limitation on
Sale/Leaseback Transactions," which is described above under "Description
of Differences Between the R&B Falcon Notes and the Transocean Sedco Forex
Notes -- Limitation on Sale/Leaseback Transactions."
(7) The covenant in Section 3.11 entitled "Limitation on Liens," which
is described above under "Description of Differences Between the R&B Falcon
Notes and the Transocean Sedco Forex Notes -- Limitation on Liens."
(8) The covenant in Section 3.12 entitled "Limitation on Restricted
Payments," which is described above under "Description of Differences
Between the R&B Falcon Notes and the Transocean Sedco Forex Notes --
Limitation on Restricted Payments."
(9) The covenant in Section 4.01 entitled "Limitations on Mergers and
Consolidations," which is described above under "Description of Differences
Between the R&B Falcon Notes and the Transocean Sedco Forex
Notes -- Limitations on Mergers and Consolidations."
(10) The covenant in Section 4.02 entitled "Successor Corporation
Substituted." Under Section 4.02, the successor to a merger, consolidation
or sale of substantially all of the assets of R&B Falcon succeeds to R&B
Falcon's obligations under the R&B Falcon indenture.
In conjunction with the deletion of the covenants identified above,
Transocean Sedco Forex is proposing to delete the following defined terms in the
indenture, which are used only in those covenants or in other defined terms
being deleted: "Attributable Indebtedness"; "Consolidated EBITDA Coverage
Ratio"; "Consolidated Net Income"; "Consolidated Net Worth"; "Hedging
Obligations"; "Incurrence"; "Indebtedness"; "Restricted Subsidiary";
"Sale/Leaseback Transactions"; and "Suspended Covenants". In addition,
Transocean Sedco Forex is proposing to delete Section 3.13 entitled "Covenant
Termination." Under Section 3.13, the covenants in Section 3.09, "Limitation on
Indebtedness," and 3.12, "Limitation on Restricted Payments," are suspended
while the 9.125% and 9.50% R&B Falcon notes are rated investment grade by
Moody's and Standard & Poor's.
52
Transocean Sedco Forex is also requesting a waiver with respect to any
default, event of default or other consequence under the R&B Falcon indenture of
failing to comply with the terms of the covenants identified above (whether
before or after the date of the supplemental indenture) and to delete clauses
(4), (5), (6) and (7) from the definition of "Event of Default" in Section 5.01,
"Events of Default." These clauses provide, respectively, that each of the
following constitutes an "event of default":
- a default that results in the acceleration of any debt of R&B Falcon or
any of its subsidiaries having an outstanding principal amount of $20
million or more, either individually or in the aggregate with other debt
that has been accelerated,
- a final judgment or order for payment of money in excess of $20 million
is rendered against R&B Falcon, any guarantor under the indenture, or any
"significant subsidiary" (as such term is defined in Regulation X under
the Securities Exchange Act of 1934, as amended) of R&B Falcon and such
judgment or order continues unsatisfied and unstayed for a period of 60
days,
- R&B Falcon, any guarantor under the indenture, or any significant
subsidiary of R&B Falcon, pursuant to or within the meaning of Title 11,
U.S. Code or any similar federal, state or foreign law for the relief of
debtors, commences to a voluntary case, consents to the entry of an order
for relief against it in an involuntary case, consents to the appointment
of a receiver, trustee, assignee, liquidator or similar official under
bankruptcy law for it or for all or a substantial part of its property,
or makes a general assignment for the benefit of its creditors, and
- a court of competent jurisdiction enters an order or decree under Title
11, U.S. Code or any similar federal, state or foreign law for the relief
of debtors that remains unstayed and in effect for 60 days and that is
for relief against R&B Falcon, any guarantor under the indenture, or any
significant subsidiary of R&B Falcon; appoints a receiver, trustee,
assignee, liquidator or similar official under bankruptcy law for or for
all or a substantial part of the property of R&B Falcon, any guarantor
under the indenture, or any significant subsidiary of R&B Falcon, or
orders the liquidation of, R&B Falcon, any guarantor under the indenture
or any significant subsidiary of R&B Falcon.
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CERTAIN RELATED TRANSACTIONS
R&B Falcon is a party to a $1.8 billion two-year revolving credit agreement
with Transocean Sedco Forex, dated April 6, 2001. Amounts outstanding under the
revolver bear interest payable quarterly at a rate of the London Interbank
Offered Rate plus 0.575 percent to 1.300 percent depending on R&B Falcon's
non-credit enhanced senior unsecured public debt rating. The amount currently
outstanding under the revolver is less than $1 million.
A subsidiary of Transocean Sedco Forex provides administrative support
services to R&B Falcon. Transocean Sedco Forex charges R&B Falcon a proportional
share of its administrative costs based on estimates of the percentage of work
the individual Transocean Sedco Forex departments perform for R&B Falcon. In the
opinion of management, R&B Falcon is being charged for all costs incurred on its
behalf by Transocean Sedco Forex under a comprehensive and reasonable cost
allocation method.
In August 2001, R&B Falcon and one of its subsidiaries sold, in separate
transactions, the Jack Bates, Deepwater Millennium, Deepwater Expedition,
Peregrine I, Deepwater Horizon, C. Kirk Rhein, Falcon 100, Deepwater Navigator
and Deepwater Discovery to Transocean Offshore International Ventures Limited
("TOIVL"). In consideration for the sales of these drilling units, $1.2 billion
of debt owed by R&B Falcon to Transocean Sedco Forex was cancelled. In addition,
TOIVL delivered promissory notes due August 17, 2011 bearing interest at 5.72
percent per annum and in the aggregate principal amount of $425.0 million. At
the time of the sales, each of the drilling units was being utilized in
connection with a drilling contract between a subsidiary of R&B Falcon and a
customer. These contracts were not transferred and R&B Falcon and its
subsidiaries secured the use of the drilling units for the purpose of performing
these contracts through charters or other arrangements.
During 2001, Transocean Sedco Forex or its subsidiaries acquired $10.5
million in total principal amount of the 6.50% R&B Falcon Notes and $12.9
million in total principal amount of the 9.125% R&B Falcon notes. These notes
have been retired.
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DESCRIPTION OF THE TRANSOCEAN SEDCO FOREX NOTES
If the exchange offers are consummated, each series of the Transocean Sedco
Forex notes to be issued in exchange for the R&B Falcon notes will be issued
under an indenture, dated as of April 15, 1997, as amended, with the Bank of New
York as successor trustee to The Chase Manhattan Bank (the "Transocean Sedco
Forex trustee"). The Transocean Sedco Forex indenture, as supplemented, will for
purposes of the following description of the Transocean Sedco Forex notes, be
referred to as the "Transocean Sedco Forex indenture." The Transocean Sedco
Forex notes will be issued only in book-entry form in denominations of $1,000
and integral multiples of $1,000.
The following summary of certain provisions of the Transocean Sedco Forex
indenture does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), and to all of the provisions of the Transocean Sedco
Forex indenture, including the definitions of certain terms in the Transocean
Sedco Forex indenture and those terms made a part of the Transocean Sedco Forex
indenture by reference to the Trust Indenture Act as in effect on the date of
the Transocean Sedco Forex indenture. The Transocean Sedco Forex indenture is,
by its terms, subject to and governed by the Trust Indenture Act.
For purposes of the following description of the Transocean Sedco Forex
notes, the terms "Transocean Sedco Forex" and "we" or "our" refers to Transocean
Sedco Forex Inc. (and any successor person or entity, as provided in the
Transocean Sedco Forex indenture), but does not include its subsidiaries.
A copy of the Transocean Sedco Forex indenture may be obtained from the
information agent and is also filed as an exhibit to the registration statement
of which this prospectus and consent solicitation statement is a part. See
"Where You Can Find More Information" for information as to how you can obtain a
copy of the Transocean Sedco Forex indenture from the SEC.
PRINCIPAL, MATURITY AND INTEREST
The Transocean Sedco Forex 6.50% notes will be limited in total principal
amount to $239,500,000 and will mature on April 15, 2003. Interest on the
Transocean Sedco Forex 6.50% notes will accrue at the rate of 6.50% per annum
and will be payable semi-annually on April 15 and October 15, commencing on
April 15, 2002, to the persons who are registered holders of the Transocean
Sedco Forex 6.50% notes at the close of business on the immediately preceding
April 1 and October 1, respectively. Interest on the Transocean Sedco Forex
6.50% notes will accrue from the last date to which interest has been paid on
the R&B Falcon 6.50% notes. Interest will be calculated on the basis of a
360-day year of twelve 30-day months.
The Transocean Sedco Forex 6.75% notes will be limited in total principal
amount to $350,000,000 and will mature on April 15, 2005. Interest on the
Transocean Sedco Forex 6.75% notes will accrue at the rate of 6.75% per annum
and will be payable semi-annually on April 15 and October 15, commencing on
April 15, 2002, to the persons who are registered holders of the Transocean
Sedco Forex 6.75% notes at the close of business on the immediately preceding
April 1 and October 1, respectively. Interest on the Transocean Sedco Forex
6.75% notes will accrue from the last date to which interest has been paid on
the R&B Falcon 6.75% notes. Interest will be calculated on the basis of a
360-day year of twelve 30-day months.
The Transocean Sedco Forex 6.95% notes will be limited in total principal
amount to $250,000,000 and will mature on April 15, 2008. Interest on the
Transocean Sedco Forex 6.95% notes will accrue at the rate of 6.95% per annum
and will be payable semi-annually on April 15 and October 15, commencing on
April 15, 2002, to the persons who are registered holders of the Transocean
Sedco Forex 6.95% notes at the close of business on the immediately preceding
55
April 1 and October 1, respectively. Interest on the Transocean Sedco Forex
6.95% notes will accrue from the last date to which interest has been paid on
the R&B Falcon 6.95% notes. Interest will be calculated on the basis of a
360-day year of twelve 30-day months.
The Transocean Sedco Forex 7.375% notes will be limited in total principal
amount to $250,000,000 and will mature on April 15, 2018. Interest on the
Transocean Sedco Forex 7.375% notes will accrue at the rate of 7.375% per annum
and will be payable semi-annually on April 15 and October 15, commencing on
April 15, 2002, to the persons who are registered holders of the Transocean
Sedco Forex 7.375% notes at the close of business on the immediately preceding
April 1 and October 1, respectively. Interest on the Transocean Sedco Forex
7.375% notes will accrue from the last date to which interest has been paid on
the R&B Falcon 7.375% notes. Interest will be calculated on the basis of a
360-day year of twelve 30-day months.
The Transocean Sedco Forex 9.125% notes will be limited in total principal
amount to $87,112,000 and will mature on December 15, 2003. Interest on the
Transocean Sedco Forex 9.125% notes will accrue at the rate of 9.125% per annum
and will be payable semi-annually on June 15 and December 15, commencing on June
15, 2002, to the persons who are registered holders of the Transocean Sedco
Forex 9.125% notes at the close of business on the immediately preceding June 1
and December 1, respectively. Interest on the Transocean Sedco Forex 9.125%
notes will accrue from the last date to which interest has been paid on the R&B
Falcon 9.125% notes. Interest will be calculated on the basis of a 360-day year
of twelve 30-day months.
The Transocean Sedco Forex 9.50% notes will be limited in total principal
amount to $300,000,000 and will mature on December 15, 2008. Interest on the
Transocean Sedco Forex 9.50% notes will accrue at the rate of 9.50% per annum
and will be payable semi-annually on June 15 and December 15, commencing on June
15, 2002, to the persons who are registered holders of the Transocean Sedco
Forex 9.50% notes at the close of business on the immediately preceding June 1
and December 1, respectively. Interest on the Transocean Sedco Forex 9.50% notes
will accrue from the last date to which interest has been paid on the R&B Falcon
9.50% notes. Interest will be calculated on the basis of a 360-day year of
twelve 30-day months.
Transocean Sedco Forex may issue the Transocean Sedco Forex notes in total
principal amounts less than the amounts described above if less than all
outstanding R&B Falcon notes are validly tendered and not withdrawn in the
exchange offers.
RANKING; ADDITIONAL DEBT
The Transocean Sedco Forex notes will be our unsecured obligations. The
Transocean Sedco Forex notes will rank equal in right of payment with all of our
other unsecured and unsubordinated indebtedness. The Transocean Sedco Forex
indenture does not limit the amount of debt that we or any of our subsidiaries
may incur or issue, nor does it restrict transactions between us and our
affiliates or dividends and other distributions by us or our subsidiaries. We
may issue debt securities under the Transocean Sedco Forex indenture from time
to time in separate series, each up to the aggregate amount we authorize from
time to time for that series.
The Transocean Sedco Forex notes offered will be structurally subordinated
to all obligations of Transocean Sedco Forex's subsidiaries, including any R&B
Falcon notes not properly tendered and accepted for payment in the exchange
offers, with respect to the assets of such subsidiaries. As of December 31,
2001, the aggregate amount of outstanding long-term debt of Transocean Sedco
Forex's subsidiaries to which holders of the Transocean Sedco Forex notes would
have been structurally subordinated was approximately $1,783.9 million, of which
$1,537.9 million represented the carrying value of the six series of R&B Falcon
notes for which Transocean Sedco Forex is making the exchange offers. See "Risk
Factors -- Risks Relating to the Exchange Offers and Consent Solicitation
Statement -- Our holding company structure results in
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substantial structural subordination and may affect our ability to make payments
on the Transocean Sedco Forex notes."
OPTIONAL REDEMPTION
The 6.50% Transocean Sedco Forex notes are not redeemable.
The 6.75% Transocean Sedco Forex notes, the 6.95% Transocean Sedco Forex
notes, the 7.375% Transocean Sedco Forex notes, the 9.125% Transocean Sedco
Forex notes and the 9.50% Transocean Sedco Forex notes are redeemable, at our
option, at any time in whole or from time to time in part upon not less than 30
and not more than 60 days' notice mailed to each holder of Transocean Sedco
Forex notes of such series to be redeemed at the holder's address appearing in
the security register, on any date prior to maturity at a price equal to 100% of
the principal amount thereof plus accrued and unpaid interest to the redemption
date (subject to the right of holders of record on the relevant record date to
receive interest due on an interest payment date that is on or prior to the
redemption date) plus the make-whole premium applicable to such series of notes
(the "Redemption Price"). In no event will the redemption price ever be less
than 100% of the principal amount of the Notes plus accrued and unpaid interest
to the redemption date.
The amount of the make-whole premium with respect to any note (or portion
thereof) of any such series to be redeemed will be equal to the excess, if any,
of:
(1) the sum of the present values, calculated as of the redemption
date, of:
- each interest payment that, but for such redemption, would have
been payable on the note (or portion thereof) of such series being
redeemed on each Interest Payment Date occurring after the
redemption date (excluding any accrued and unpaid interest for the
period prior to the redemption date), and
- the principal amount that, but for such redemption, would have been
payable at the final maturity of the note (or portion thereof) of
such series being redeemed,
over
(2) the principal amount of the note (or portion thereof) of such
series being redeemed.
The present values of interest and principal payments referred to in clause
(1) above will be determined in accordance with generally accepted principles of
financial analysis. Such present values will be calculated by discounting the
amount of each payment of interest or principal from the date that each such
payment would have been payable, but for the redemption, to the Redemption Date
at a discount rate equal to the U.S. Treasury yield (as defined below) plus (1)
20 basis points in the case of the 6.75% Transocean Sedco Forex notes and the
6.95% Transocean Sedco Forex notes, (2) 25 basis points in the case of the
7.375% Transocean Sedco Forex notes, and (3) 50 basis points in the case of the
9.125% Transocean Sedco Forex notes and the 9.50% Transocean Sedco Forex notes.
The make-whole premium will be calculated by an independent investment
banking institution of national standing appointed by us. If we fail to appoint
such an institution at least 45 business days prior to the redemption date, or
if the institution appointed is unwilling or unable to make such calculation,
such calculation will be made by an independent investment banking institution
of national standing appointed by the Transocean Sedco Forex trustee (in any
such case, an "Independent Investment Banker").
For purposes of determining the make-whole premium, "U.S. Treasury yield"
means an annual rate of interest equal to the weekly average yield to maturity
of U.S. Treasury Notes that have a constant maturity that corresponds to the
remaining term to maturity of the notes,
57
calculated to the nearest 1/12th of a year (the "Remaining Term"). The U.S.
Treasury yield will be determined as of the third business day immediately
preceding the applicable redemption date.
The weekly average yields of U.S. Treasury Notes will be determined by
reference to the most recent statistical release published by the Federal
Reserve Bank of New York and designated "H.15(519) Selected Interest Rates" or
any successor release (the "H.15 Statistical Release"). If the H.15 Statistical
Release sets forth a weekly average yield for U.S. Treasury Notes having a
constant maturity that is the same as the Remaining Term, then the U.S. Treasury
yield will be equal to such weekly average yield. In all other cases, the U.S.
Treasury yield will be calculated by interpolation, on a straight-line basis,
between the weekly average yields on the U.S. Treasury Notes that have a
constant maturity closest to and greater than the Remaining Term and the U.S.
Treasury Notes that have a constant maturity closest to and less than the
Remaining Term (in each case as set forth in the H.15 Statistical Release). Any
weekly average yields so calculated by interpolation will be rounded to the
nearest 1/100th of 1%, with any figure of 1/200 of 1% or above being rounded
upward. If weekly average yields for U.S. Treasury Notes are not available in
the H.15 Statistical Release or otherwise, then the U.S. Treasury yield will be
calculated by interpolation of comparable rates selected by the Independent
Investment Banker.
If less than all of the notes of any such series are to be redeemed, the
Transocean Sedco Forex trustee will select the notes of such series to be
redeemed by such method as the trustee deems fair and appropriate. The trustee
may select for redemption notes and portions of notes of such series in amounts
of $1,000 or whole multiples of $1,000.
The notes are not entitled to the benefit of any sinking fund or other
mandatory redemption provisions.
RESTRICTIVE COVENANTS
In the following discussion, "we" or "our" means Transocean Sedco Forex
Inc. and its subsidiaries, unless the context indicates otherwise. When we refer
to our "drilling rigs and drillships," we mean any drilling rig or drillship (or
the stock or indebtedness of any subsidiary owning a drilling rig or drillship)
that we lease or own all or part of and that our board of directors deems of
material importance to us. No drilling rig or drillship that has a gross book
value that is less than 2% of consolidated net tangible assets will be deemed of
material importance. When we refer to "consolidated net tangible assets," we
mean the total amount of our assets (less reserves and other properly deductible
items) after deducting current liabilities (other than those that are extendable
at our option to a date more than 12 months after the date the amount is
determined), goodwill and other intangible assets shown in our most recent
consolidated balance sheet prepared in accordance with accounting principles
generally accepted in the United States.
LIMITATION ON LIENS
In the Transocean Sedco Forex indenture, we have agreed that we will not
create, assume or allow to exist any debt secured by a lien upon any of our
drilling rigs or drillships, unless we secure the Transocean Sedco Forex notes
equally and ratably with the secured debt. This covenant also applies to other
series of debt securities issued under the Transocean Sedco Forex indenture
unless the terms of that series expressly provide otherwise. This covenant has
exceptions that permit:
- liens already existing on the date the applicable series of Transocean
Sedco Forex notes is issued,
58
- liens already existing on a particular drilling rig or drillship at the
time we acquire that drilling rig or drillship, and liens already
existing on drilling rigs or drillships of a corporation or other entity
at the time it becomes our subsidiary,
- liens securing debt incurred to finance the acquisition, completion of
construction and commencement of commercial operation, alteration, repair
or improvement of any drilling rig or drillship, if the debt was incurred
prior to, at the time of or within 12 months after that event, and liens
securing debt in excess of the purchase price or cost if recourse on the
debt is only against the drilling rig or drillship in question,
- liens securing intercompany debt,
- liens in favor of a governmental entity to secure either (1) payments
under any contract or statute or (2) industrial development, pollution
control or similar indebtedness,
- liens imposed by law such as mechanics' or workmen's liens,
- governmental liens under contracts for the sale of products or services,
- liens under workers compensation laws or similar legislation,
- liens in connection with legal proceedings or securing taxes or
assessments,
- good faith deposits in connection with bids, tenders, contracts or
leases,
- deposits made in connection with maintaining self-insurance, to obtain
the benefits of laws, regulations or arrangements relating to
unemployment insurance, old age pensions, social security or similar
matters or to secure surety, appeal or customs bonds, and
- any extensions, renewals or replacements of the above-described liens if
both of the following conditions are met:
(1) the amount of debt secured by the new lien does not exceed the
amount of debt secured by the existing lien, plus any additional debt used
to complete a specific project, and
(2) the new lien is limited to all or a part of the drilling rigs or
drillships (plus any improvements) secured by the original lien issued
under the Transocean Sedco Forex indenture.
In addition, without securing the debt securities issued under the
Transocean Sedco Forex indenture as described above, we may create, assume or
allow to exist secured debt that would otherwise be prohibited, in an aggregate
amount that does not exceed a "basket" equal to 10% of our consolidated net
tangible assets. When determining whether secured debt is permitted by this
exception, we must include in the calculation of the "basket" amount all of our
other secured debt that would otherwise be prohibited and the present value of
lease payments in connection with sale and lease-back transactions that would be
prohibited by the "Limitation on Sale and Lease-Back Transactions" covenant
described below if this exception did not apply.
LIMITATION ON SALE AND LEASE-BACK TRANSACTIONS
We have agreed that we will not enter into a sale and lease-back
transaction covering any drilling rig or drillship, unless one of the following
applies:
- we could incur debt secured by the leased property in an amount at least
equal to the present value of the lease payments in connection with that
sale and lease-back transaction without violating the "Limitation on
Liens" covenant described above, or
- within six months of the effective date of the sale and lease-back
transaction, we apply an amount equal to the present value of the lease
payments in connection with the sale and lease-back transaction to (1)
the acquisition of any drilling rig or drillship or (2) the
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retirement of long-term debt ranking at least equally with the debt
securities issued under the Transocean Sedco Forex indenture.
When we use the term "sale and lease-back transaction," we mean any
arrangement by which we sell or transfer to any person any drilling rig or
drillship that we then lease back from them. This term excludes leases shorter
than three years, intercompany leases, leases executed within 12 months of the
acquisition, construction, improvement or commencement of commercial operation
of the drilling rig or drillship, and arrangements pursuant to any provision of
law with an effect similar to the former Section 168(f)(8) of the Internal
Revenue Code of 1954 (which permitted the lessor to recognize depreciation on
the property).
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Transocean Sedco Forex indenture generally permits a consolidation or
merger between us and another entity. The Transocean Sedco Forex indenture also
permits our transfer or disposal of all or substantially all of our assets. We
have agreed, however, that we will consolidate with or merge into any entity, or
transfer or dispose of all or substantially all of our assets to any entity,
only if:
- the resulting entity assumes the due and punctual payment of the debt
securities issued under the indenture and the performance of our
covenants under the indenture, and
- immediately after giving effect to the transaction, no event of default,
and no event that, after notice or lapse of time, would become an event
of default, would occur and be continuing.
If a resulting entity assumes our obligations under the Transocean Sedco
Forex notes and the indenture as described above, we will be relieved of those
obligations, except in the case of our transfer or disposal of assets by lease.
EVENTS OF DEFAULT
The following are events of default with respect to the Transocean Sedco
Forex notes:
- our failure to pay interest on or any additional amounts with respect to
the Transocean Sedco Forex notes for 30 days,
- our failure to pay principal of, or any premium on, the Transocean Sedco
Forex notes when due,
- our failure to perform any of our other covenants in the Transocean Sedco
Forex indenture (other than a covenant included in the Transocean Sedco
Forex indenture solely for the benefit of another series of debt
securities) for 90 days after written notice by the trustee or by the
holders of at least 25% in principal amount of all outstanding debt
securities under the Transocean Sedco Forex indenture, and
- various events involving a bankruptcy, insolvency or reorganization of
Transocean Sedco Forex.
The default under the Transocean Sedco Forex indenture with respect to one
series of debt securities issued under the indenture will not necessarily be a
default with respect to another series. The Transocean Sedco Forex trustee may
withhold notice to the holders of the Transocean Sedco Forex notes of any
default or event of default (except for a default in any payment on the
Transocean Sedco Forex notes) if the trustee considers it in the interest of the
holders of the Transocean Sedco Forex notes to do so.
In the case of an event of default with respect to the Transocean Sedco
Forex notes, the Transocean Sedco Forex trustee or the holders of at least 25%
in principal amount of the series of Transocean Sedco Forex notes affected by
the default (or, in some cases, of all outstanding
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debt securities under the indenture, voting as one class) may declare the
principal of the Transocean Sedco Forex notes to be due and payable immediately.
If an event of default relating to events of bankruptcy, insolvency or
reorganization occurs, the principal of the Transocean Sedco Forex notes will
become immediately due and payable without any action on the part of the
Transocean Sedco Forex trustee or any holder. The holders of a majority in
principal amount of the outstanding Transocean Sedco Forex notes may be affected
by the default (or, in some cases, of all outstanding debt securities under the
indenture, voting as one class) in some cases rescind this accelerated payment
requirement. Depending on the terms of our other indebtedness, an event of
default under the indenture may give rise to cross defaults on our other
indebtedness.
In most cases, the Transocean Sedco Forex trustee will be under no
obligation to exercise any of its rights or powers under the indenture at the
request or direction of any of the holders, unless those holders have offered to
the trustee reasonable indemnity. The holders of a majority in principal amount
of any series of Transocean Sedco Forex notes (or, in some cases, of all
outstanding debt securities under the indenture, voting as one class) may direct
the time, method and place of:
- conducting any proceeding for any remedy available to the trustee, or
- exercising any trust or power conferred on the trustee with respect to
that series of Transocean Sedco Forex notes.
In the case of an event of default, the Transocean Sedco Forex trustee will
be required to use the degree of care and skill of a prudent man in the conduct
of his own affairs.
A holder of Transocean Sedco Forex notes may not individually pursue any
remedy under the indenture unless all of the following conditions are met:
- the holder has previously given written notice to the Transocean Sedco
Forex trustee of an event of default with respect to that series of
Transocean Sedco Forex notes,
- the holders of not less than 25% in principal amount of the outstanding
Transocean Sedco Forex notes of that series have made a written request
to the trustee to institute proceedings in its own name,
- the holder has offered the trustee reasonable indemnity,
- the trustee has failed to act within 60 days after receipt of the notice
and indemnity, and
- the holders of a majority in principal amount of the outstanding
Transocean Sedco Forex notes of that series have given no direction
inconsistent with the request.
The foregoing limitations with respect to remedies do not, however, affect
the right of a holder of any debt security to sue for the enforcement of any
overdue payment.
DEFEASANCE
When we use the term "defeasance," we mean discharge from some or all of
our obligations under the Transocean Sedco Forex indenture. If we deposit with
the Transocean Sedco Forex trustee money or U.S. government securities
sufficient to make payments on the Transocean Sedco Forex notes of a series on
the dates those payments are due and payable, then at our option either of the
following will occur:
- we will no longer have any obligation to the holders of the Transocean
Sedco Forex notes of that series to comply with the restrictive covenants
under the indenture, and the related events of default will no longer
apply to us ("covenant defeasance"), but our other obligations under the
indenture and the Transocean Sedco Forex notes of that series, including
our obligations to make payments on the Transocean Sedco Forex notes of
that
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series, to register the transfer or exchange of the Transocean Sedco
Forex notes of that series, to replace stolen, lost or mutilated
Transocean Sedco Forex notes of that series, to maintain paying agencies
and to hold monies for payment in trust, will continue, or
- we will be discharged from all of our obligations with respect to the
Transocean Sedco Forex notes of that series ("legal defeasance and
discharge") and holders of the Transocean Sedco Forex notes of that
series will be entitled to claim payments on their debt securities only
from the trust fund.
We will be required to deliver to the trustee an opinion of counsel that
the deposit and related defeasance would not cause the holders of the Transocean
Sedco Forex notes to recognize income, gain or loss for U.S. federal income tax
purposes. If we elect legal defeasance and discharge, that opinion of counsel
must be based upon a ruling from the U.S. Internal Revenue Service or a change
in law to that effect.
TAX ADDITIONAL AMOUNTS
We will pay any amounts due with respect to the Transocean Sedco Forex
notes without deduction or withholding for any and all present and future
withholding taxes, levies, imposts and charges (a "withholding tax") imposed by
or for the account of the Cayman Islands. If the Cayman Islands requires us to
deduct or withhold any of these taxes, levies, imposts or charges, we will
(subject to compliance by the holder of the Transocean Sedco Forex notes with
any relevant administrative requirements) pay these additional amounts in
respect of principal amount, premium (if any), redemption price, and interest
(if any), in accordance with the terms of the Transocean Sedco Forex notes and
the Transocean Sedco Forex indenture, as may be necessary so that the net
amounts paid to the holder or the trustee after such deduction or withholding
will equal the principal amount, premium (if any), redemption price, and
interest (if any), on the Transocean Sedco Forex notes. However, we will not pay
any additional amounts in the following instances:
- if any withholding would not be payable or due but for the fact that (1)
the holder of Transocean Sedco Forex notes (or a fiduciary, settlor,
beneficiary of, member or shareholder of, the holder, if the holder is an
estate, trust, partnership or corporation), is a domiciliary, national or
resident of, or engaging in business or maintaining a permanent
establishment or being physically present in, the Cayman Islands or
otherwise having some present or former connection with the Cayman
Islands other than the holding or ownership of Transocean Sedco Forex
notes or the collection of principal amount, premium (if any), redemption
price, and interest (if any), in accordance with the terms of the
Transocean Sedco Forex notes and the Transocean Sedco Forex indenture, or
the enforcement of the Transocean Sedco Forex notes or (2) where
presentation is required, the Transocean Sedco Forex notes were presented
more than 30 days after the date such payment became due or was provided
for, whichever is later,
- if any withholding tax is attributable to any estate, inheritance, gift,
sales, transfer, excise, personal property or similar tax, levy, impost
or charge,
- if any withholding tax is attributable to any tax, levy, impost or charge
which is payable otherwise than by withholding from payment of principal
amount, premium (if any), redemption price, and interest (if any),
- if any withholding tax would not have been imposed but for the failure to
comply upon our request with certification, information, documentation or
other reporting requirements concerning the nationality, residence,
identity or connections with the relevant tax authority of the holder or
beneficial owner of the Transocean Sedco Forex notes, if this compliance
is required by statute or by regulation as a precondition to relief or
exemption from such withholding tax, or
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- any combination of the instances described in the preceding bullet
points.
We also will not pay any additional amounts to any holder who is a
fiduciary or partnership or other than the sole beneficial owner of the
Transocean Sedco Forex note to the extent that a beneficiary or settlor with
respect to such fiduciary, or a member or such partnership or a beneficial owner
thereof, would not have been entitled to the payment of such additional amounts
had such beneficiary, settlor, member or beneficial owner been the holder of the
Transocean Sedco Forex note.
PAYMENT AND PAYING AGENTS
We will make payments on the Transocean Sedco Forex notes at the office of
the paying agents we designate from time to time. We may make, at our option,
interest payments by check mailed to the person entitled to the payment as it
appears on the security register. We will make interest payments to the person
in whose name the Transocean Sedco Forex notes are registered at the close of
business on the record date for the interest payment, even if that person no
longer owns the Transocean Sedco Forex notes on the interest payment date.
We have designated the corporate trust office of the Transocean Sedco Forex
indenture trustee as a paying agent for payments on the Transocean Sedco Forex
notes. We may at any time designate additional paying agents, rescind the
designation of any paying agent or approve a change in the office through which
any paying agent acts. We will, however, be required to maintain a paying agent
in each place of payment for the Transocean Sedco Forex notes.
Any funds we pay to a paying agent for payments on the Transocean Sedco
Forex notes that remain unclaimed for three years after the payments become due
and payable will be repaid to us, subject to applicable escheat laws. After
repayment to us, the holder of that Transocean Sedco Forex note can claim
payment only from us and not from the paying agent.
MODIFICATION AND WAIVER
We may modify or amend the Transocean Sedco Forex indenture if the holders
of a majority in principal amount of the outstanding debt securities of all
series issued under the Transocean Sedco Forex indenture (acting as one class)
affected by the modification or amendment consent to it. Without the consent of
the holder of each outstanding debt security affected, however, no modification
may:
- change the stated maturity of the principal of or any installment of
principal of or interest on any debt security,
- reduce the principal amount of, the interest rate on, any additional
amount with respect to or the premium payable upon redemption of any debt
security,
- make the debt security payable in a currency other than originally stated
in the debt security,
- change the place where the principal of, any additional amounts with
respect to or any premium or interest on any debt security is payable,
- impair the right to institute suit for the enforcement of any payment on
any debt security,
- reduce the percentage in principal amount of outstanding debt securities
necessary to modify the indenture, waive compliance with the provisions
of the Transocean Sedco Forex indenture or waive defaults, or
- modify any of the above provisions.
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We and the Transocean Sedco Forex trustee may agree to modify, amend or
supplement the Transocean Sedco Forex indenture without the consent of any
holders of Transocean Sedco Forex notes in certain circumstances, including:
- to evidence the assumption of our obligations under the indenture and the
debt securities issued under the indenture by a successor,
- to add covenants or events of default or to surrender any of our rights
under the indenture,
- to provide security for any series of debt securities issued under the
indenture,
- to make any change that does not adversely affect any outstanding
Transocean Sedco Forex debt securities of a series,
- to establish the terms of any series of debt securities,
- to add provisions necessary to permit or facilitate defeasance of any
series of debt securities if we have received an opinion of counsel that
those provisions do not materially adversely affect the holders of any
series of debt securities,
- to provide for a successor trustee, or
- to cure any ambiguity, defect or inconsistency.
The holders of a majority in principal amount of the outstanding Transocean
Sedco Forex notes of any series (or, in some cases, of all outstanding debt
securities under the indenture or of all series affected) may waive past
defaults under the Transocean Sedco Forex indenture and compliance by us with
our covenants under the indenture. Those holders may not, however, waive any
default in any payment on any debt security of that series or compliance with a
provision that cannot be modified or amended without the consent of each holder
affected.
BOOK-ENTRY SYSTEM
The Transocean Sedco Forex notes will be represented by one or more global
securities. A global security is a special type of indirectly held security.
Each global security will be deposited with, or on behalf of, The Depository
Trust Company ("DTC") and be registered in the name of a nominee of DTC. Except
under the circumstances described below, the Transocean Sedco Forex notes will
not be issued in definitive form in the name of individual holders.
Upon the issuance of a global security, DTC will credit on its book-entry
registration and transfer system the accounts of persons designated by the
initial purchaser with the respective principal amounts of the Transocean Sedco
Forex notes represented by the global security. Ownership of beneficial
interests in a global security will be limited to DTC participants (that is,
persons that have accounts with DTC or its nominee) or persons that may hold
interests through DTC participants. Ownership of beneficial interests in a
global security will be shown on, and the transfer of that ownership will be
effected only through, records maintained by DTC or its nominee (except with
respect to persons that are themselves DTC participants).
So long as DTC or its nominee is the registered owner of a global security,
DTC or the nominee will be considered the sole owner or holder of the Transocean
Sedco Forex notes represented by that global security under the indenture.
Except as described below, owners of beneficial interests in a global security
will not be entitled to have Transocean Sedco Forex notes represented by that
global security registered in their names, will not receive or be entitled to
receive physical delivery of Transocean Sedco Forex notes in definitive form and
will not be considered the owners or holders of the Transocean Sedco Forex notes
under the indenture. Principal and interest payments on Transocean Sedco Forex
notes registered in the name of DTC or its nominee will be made to DTC or the
nominee, as the registered owner. Neither our company, the trustee, any paying
agent or the registrar for the Transocean Sedco Forex notes
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will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial interests in a global security or
for maintaining, supervising or reviewing any records relating to such
beneficial interests. The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Those
limits and laws may impair the ability to transfer beneficial interests in a
global security.
We expect that DTC or its nominee, upon receipt of any payment of principal
or interest, will credit immediately the participants' accounts with payments in
amounts proportionate to their beneficial interests in the principal amount of
the relevant global security as shown on the records of DTC or its nominee. We
also expect that payments by participants to owners of beneficial interests in a
global security held through those participants will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of those participants.
If DTC is at any time unwilling or unable to continue as a depositary and a
successor depositary is not appointed by us within 90 days, we will issue the
Transocean Sedco Forex notes in definitive form in exchange for the entire
global security for the Transocean Sedco Forex notes. In addition, we may at any
time choose not to have the Transocean Sedco Forex notes represented by a global
security and will then issue the Transocean Sedco Forex notes in definitive form
in exchange for the entire global security relating to the Transocean Sedco
Forex notes. In any such instance, an owner of a beneficial interest in a global
security will be entitled to physical delivery in definitive form of the
Transocean Sedco Forex notes represented by the global security equal in
principal amount to that beneficial interest and to have the Transocean Sedco
Forex notes registered in its name. Transocean Sedco Forex notes so issued in
definitive form will be issued as registered Transocean Sedco Forex notes in
denominations of $1,000 and integral multiples thereof, unless otherwise
specified by us.
TRANSFER AND EXCHANGE
We have appointed the Transocean Sedco Forex trustee as security registrar
for the Transocean Sedco Forex notes. We are required to maintain an office or
agency for transfers and exchanges in each place of payment. We may at any time
designate additional transfer agents for the Transocean Sedco Forex notes or
rescind the designation of any transfer agent.
In the case of any redemption of the Transocean Sedco Forex notes, we will
not be required:
- to issue, register the transfer of, or exchange the Transocean Sedco
Forex notes during a period beginning 15 days before the day of mailing
of the relevant notice of redemption and ending on the close of business
on the day of mailing of the relevant notice of redemption, or
- to register the transfer or exchange of a Transocean Sedco Forex note, or
portion of a note, selected for redemption, except for the unredeemed
portion of any Transocean Sedco Forex note we are redeeming in part.
MEETINGS
Meetings of holders of Transocean Sedco Forex notes or of any or all series
of debt securities issued under the Transocean Sedco Forex indenture may be
convened on notice:
- by the trustee,
- by us, if we ask the trustee to call a meeting and it fails to do so, or
- by the holders of 10% in principal amount of the debt securities of that
series, if they ask the trustee to call a meeting and it fails to do so.
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Holders entitled to vote a majority in principal amount of the outstanding
debt securities of any series constitute a quorum at any meeting of holders of
that series. Except for actions requiring the consent of all holders of the
Transocean Sedco Forex notes affected by the action, any action at a meeting
adopted by the holders of a majority in principal amount of the Transocean Sedco
Forex notes of a series (or a lesser percentage required for the action by the
indenture) will be binding on all holders of the Transocean Sedco Forex notes of
that series.
NOTICES
Notices to holders of the Transocean Sedco Forex notes will be given by
mail to the holder's address as it appears in the security register.
GOVERNING LAW
New York law governs the Transocean Sedco Forex indenture and the
Transocean Sedco Forex notes.
THE TRUSTEE
The Bank of New York is the trustee under the Transocean Sedco Forex
indenture. We may borrow money and maintain other banking relationships, in the
ordinary course of business, with the trustee and its affiliates. The Transocean
Sedco Forex indenture, however, contains limitations on the right of the
trustee, if it becomes one of our creditors, to obtain payment of claims or to
realize on certain property received for any such claim, as security or
otherwise. If the trustee acquires any conflicting interest, it must eliminate
that conflict or resign.
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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of (1) the material U.S. federal income tax
considerations relating to the exchange offers and consent solicitations and to
the ownership and disposition of the Transocean Sedco Forex notes to initial
holders of such securities who are U.S. holders (as described below) and (2) the
material U.S. federal income and estate tax considerations relating to the
exchange offers and consent solicitations and to the ownership and disposition
of the Transocean Sedco Forex notes to initial holders of such securities who
are non-U.S. holders (as described below). This discussion only addresses tax
considerations relevant to holders that hold R&B Falcon notes, and will hold
Transocean Sedco Forex notes, as capital assets.
This discussion does not address all tax considerations that may be
important to you in light of your particular circumstances (such as the
alternative minimum tax provisions) or under certain special rules. Special
rules may apply, for instance, to banks, tax-exempt organizations, insurance
companies, dealers in securities or currencies, persons who hold R&B Falcon
notes or Transocean Sedco Forex notes as part of a hedge, conversion or
constructive sale transaction, or straddle or other risk reduction transaction,
traders in securities that elect to use a mark-to-market method of accounting
for their securities holdings, persons whose functional currency for tax
purposes is not the U.S. dollar, or persons who have ceased to be United States
citizens or to be taxed as resident aliens. This discussion is limited to
holders of Transocean Sedco Forex notes who acquire such securities in
connection with the exchange offer. This discussion also does not address the
tax consequences arising under the laws of any foreign, state or local
jurisdiction.
This discussion is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), its legislative history, existing and proposed U.S. Treasury
regulations, and judicial decisions and administrative interpretations
thereunder, as of the date hereof, all of which are subject to change or
different interpretations, possibly with retroactive effect. We cannot assure
you that the Internal Revenue Service (the "IRS") will not challenge one or more
of the tax results described herein, and we have not obtained, nor do we intend
to obtain, a ruling from the IRS with respect to the U.S. federal tax
consequences of the exchange offers and consent solicitations and of the
ownership and disposition of the Transocean Sedco Forex notes.
PLEASE CONSULT YOUR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES
TO YOU OF THE EXCHANGE OFFERS AND CONSENT SOLICITATIONS AND OF THE OWNERSHIP AND
DISPOSITION OF THE TRANSOCEAN SEDCO FOREX NOTES, INCLUDING THE EFFECT AND
APPLICABILITY OF STATE, LOCAL OR FOREIGN TAX LAWS.
U.S. HOLDERS
You are a U.S. holder for purposes of this discussion if you are a
beneficial owner of R&B Falcon notes or Transocean Sedco Forex notes that is,
for U.S. federal income tax law purposes:
- a citizen or resident of the United States,
- a corporation organized in or under the laws of the United States or of
any political subdivision thereof,
- an estate the income of which is subject to U.S. federal income taxation
regardless of its source, or
- a trust if a U.S. court can exercise primary supervision over the trust's
administration and one or more U.S. persons are authorized to control all
substantial decisions of the trust.
In the case of a holder of R&B Falcon notes or Transocean Sedco Forex notes
which is a partnership, the tax consequences will generally affect the partner
rather than the partnership, but special considerations not here set forth may
apply.
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EXCHANGE OFFERS
The exchange of R&B Falcon notes for Transocean Sedco Forex notes pursuant
to the exchange offers will be a taxable transaction for U.S. federal income tax
purposes. Accordingly, if you tender your R&B Falcon notes, you will generally
recognize gain or loss equal to the difference between the issue price, as
defined below, of the Transocean Sedco Forex notes which you receive and your
adjusted basis in the R&B Falcon notes. This gain or loss will generally be
capital gain or loss except for gain attributable to accrued market discount, if
any. In addition, you will recognize ordinary interest income on the amount of
accrued and unpaid interest on the R&B Falcon notes which you have not
previously included in income.
If the Transocean Sedco Forex notes are publicly traded, within the meaning
of the applicable Treasury regulations, or the Transocean Sedco Forex notes are
not publicly traded but the R&B Falcon notes are publicly traded, the issue
price of the Transocean Sedco Forex notes will be the fair market value of such
publicly traded notes reduced by the amount of pre-issuance accrued interest on
the Transocean Sedco Forex notes. We believe that the requisite public trading
will exist and intend to take this position for all relevant reporting and other
purposes. Moreover, we intend to reduce the issue price of the Transocean Sedco
Forex notes by the amount of pre-issuance accrued interest on such notes, and
you should also compute the issue price in such manner. See "-- Taxation of
Interest."
CONSENT PAYMENTS
The proper treatment of the consent payments is unclear. However, we and
R&B Falcon believe, and intend to take the position that, the payments will
represent ordinary income to holders in the full amount of the payments, without
reduction by any portion of a holder's basis in the R&B Falcon notes. You should
consult your own tax advisor as to possible alternative treatments of the
consent payments.
TAXATION OF INTEREST
Generally, you will be required to include interest received on a
Transocean Sedco Forex note as ordinary income at the time it accrues or is
received, in accordance with your regular method of accounting for U.S. federal
income tax purposes. However, Transocean Sedco Forex intends to treat, and you
should also treat, a portion of the interest paid on the first payment date as a
return of pre-issuance accrued interest that is not taxable and is not income.
DISCOUNT OR PREMIUM
We do not expect that the face amount of any Transocean Sedco Forex note
will exceed the issue price of the note (other than by an amount qualifying for
a de minimis exception). If this nevertheless occurs, the difference constitutes
original issue discount, and you must include such original issue discount in
income as ordinary income as it accrues on the basis of a constant yield to
maturity, regardless of the receipt of cash representing such income. Your basis
in the security will be increased by the amount of original issue discount
includible in your gross income as it accrues.
If the issue price of a Transocean Sedco Forex note exceeds its face
amount, you will be considered to have purchased such security with "amortizable
bond premium" equal in amount to such excess. You may elect to amortize such
premium by offsetting against the interest otherwise required to be included in
income in respect of such security during any taxable year the allocable portion
of such premium, determined under the constant yield method over the remaining
term. In such a case, your basis in the security will be reduced by the amount
of bond premium offset against interest.
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The rules concerning discounts and premiums are complex, and you should
consult your tax advisor to determine how, and to what extent, any discount or
premium will be included in your income (in the case of any discount) or
amortized (in the case of any premium), and as to the desirability, mechanics
and consequences of making any elections in connection therewith.
SALE, EXCHANGE OR RETIREMENT OF THE TRANSOCEAN SEDCO FOREX NOTES
With certain exceptions, upon the sale, exchange or retirement of a
Transocean Sedco Forex note, you will recognize gain or loss equal to the
difference between the sale or redemption proceeds and your adjusted tax basis
in such security. Your adjusted tax basis in a Transocean Sedco Forex note will
generally equal your cost for such security, increased by any accrued discount
or decreased by any amortized premium during your holding period of the note.
Gain or loss realized on the sale, exchange or retirement of a Transocean Sedco
Forex note (except for certain payments of accrued interest, as described below)
will generally be capital gain or loss and will be long-term capital gain or
loss if such security is held for more than one year. You should consult your
tax advisors regarding the treatment of capital gains (which may be taxed at
lower rates than ordinary income for taxpayers who are individuals) and losses
(the deductibility of which is subject to limitations). Payments for accrued
interest not previously included in income will be treated as ordinary interest
income.
NON-U.S. HOLDERS
You generally are a non-U.S. holder for purposes of this discussion if you
are a beneficial owner of R&B Falcon notes or Transocean Sedco Forex notes that
is not a U.S. holder, as described above.
EXCHANGE OFFERS
You generally will not be subject to U.S. federal income and withholding
tax on gain realized on the exchange of R&B Falcon notes for Transocean Sedco
Forex notes pursuant to the exchange offers unless:
- you are an individual present in the United States for 183 days or more
in the year of such exchange and either (A) you have a "tax home" in the
United States and certain other requirements are met or (B) the gain from
the exchange is attributable to an office or other fixed place of
business maintained by you in the United States, or
- the gain is effectively connected with your conduct of a U.S. trade or
business. See "-- Income Effectively Connected with U.S. Trade or
Business."
However, to the extent that disposition proceeds represent interest on the R&B
Falcon notes accruing between interest payment dates, you will be required to
establish an exemption from United States federal income tax. See "-- Taxation
of Interest" for a discussion of the requirements of the exemption.
CONSENT PAYMENTS
In compliance with U.S. federal withholding tax requirements applicable to
payments of certain U.S. source income to foreign persons, R&B Falcon intends to
withhold tax at the rate of 30% on consent payments made to non-U.S. holders,
unless the holder establishes an exemption or a reduced rate. An exemption will
apply to a consent payment which represents effectively connected income to the
holder (in which case the non-U.S. holder should provide IRS Form W-8ECI), and
an exemption or reduced rate may apply to a consent payment when the non-U.S.
holder is entitled to the benefits of a tax treaty (in which case the non-U.S.
holder should provide IRS Form W-8BEN).
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The proper treatment of the consent payments is unclear. Notwithstanding
that R&B Falcon will withhold tax on the consent payments in the absence of an
exemption, it is possible that such withholding is not in fact required, in
which case you would be entitled to a refund of the tax withheld. You should
consult your own tax advisor on this matter.
TAXATION OF INTEREST
As long as we are not engaged in the conduct of any trade or business in
the United States, the payment of interest on a Transocean Sedco Forex note by
us or any paying agent of ours to you will not be subject to U.S. federal income
and withholding tax. Even if we were engaged in the conduct of a trade or
business in the U.S. and interest was treated as paid by that U.S. trade or
business, payment of interest would be exempt from U.S. federal income and
withholding tax, provided that:
- you do not actually or constructively own 10% or more of the total
combined voting power of all classes of our shares,
- you are not a controlled foreign corporation that is related to us within
the meaning of the Code, and
- the U.S. payor does not have actual knowledge or reason to know that you
are a U.S. person and either (1) the beneficial owner of the Transocean
Sedco Forex note certifies to the applicable payor or its agent, under
penalties of perjury, that it is not a U.S. holder and provides its name
and address on IRS Form W-8BEN (or a suitable substitute form) or (2) a
securities clearing organization, bank or other financial institution,
that holds customers' securities in the ordinary course of its trade or
business (a "financial institution") and holds the Transocean Sedco Forex
note, certifies under penalties of perjury that a Form W-8BEN (or a
suitable substitute form) has been received from the beneficial owner by
it or by a financial institution between it and the beneficial owner and
furnishes the payor with a copy of the form or the U.S. payor otherwise
possesses documentation upon which it may rely to treat the payment as
made to a non-U. S. person in accordance with U.S. Treasury regulations.
If such interest is effectively connected with a U.S. trade or business of
yours, see "-- Income Effectively Connected with U.S. Trade or Business."
We do not expect that any non-U.S. holder of a Transocean Sedco Forex note
will be subject to the rules relating to obligations with original issue
discount. If this nevertheless occurs, payments made to a non-U.S. holder which
are attributable to original issue discount will generally be treated in the
same manner as payments of interest, as just described.
A portion of the first payment of stated interest made by us on the
Transocean Sedco Forex notes will represent pre-issuance interest in the amount
of interest on the R&B Falcon notes which was accrued and unpaid on the date of
the exchange. This payment will be treated as a payment by us and subject to the
same U.S. federal withholding tax rules and exemptions applicable to interest
payments, as described above.
GAIN ON DISPOSITION OF THE TRANSOCEAN SEDCO FOREX NOTES
You generally will not be subject to U.S. federal income and withholding
tax on gain realized on the sale, exchange or redemption of a Transocean Sedco
Forex note unless:
- you are an individual present in the United States for 183 days or more
in the year of such sale, exchange or redemption and either (A) you have
a "tax home" in the United States and certain other requirements are met
or (B) the gain from the disposition is attributable to an office or
other fixed place of business maintained by you in the United States, or
70
- the gain is effectively connected with your conduct of a U.S. trade or
business. See "-- Income Effectively Connected with U.S. Trade or
Business."
However, to the extent that disposition proceeds represent either interest
accruing between interest payment dates or original issue discount accruing
while you held the Transocean Sedco Forex note, you may be required to establish
an exemption from United States federal income and withholding tax. See
"-- Taxation of Interest."
INCOME EFFECTIVELY CONNECTED WITH U.S. TRADE OR BUSINESS
Except to the extent otherwise provided under an applicable tax treaty, you
generally will be taxed in the same manner as a U.S. holder with respect to
income or gain on a Transocean Sedco Forex note or R&B Falcon note if such
income or gain is effectively connected with a U.S. trade or business of yours.
Effectively connected income received or gain realized by a corporate non-U.S.
holder may also, under certain circumstances, be subject to an additional
"branch profits tax" at a 30% rate (or, if applicable, a lower treaty rate),
subject to certain adjustments. Such effectively connected income or gain will
not be subject to withholding tax if the holder delivers the appropriate form
(currently IRS Form W-8ECI) to the payor.
U.S. FEDERAL ESTATE TAX
A Transocean Sedco Forex note held by an individual who at the time of
death is not a citizen or resident of the United States (as specially defined
for U.S. federal estate tax purposes) will not be subject to U.S. federal estate
tax.
BACKUP WITHHOLDING AND INFORMATION REPORTING
U.S. HOLDERS
Consent payments and interest payments made on, or the proceeds of the sale
or other disposition of, the R&B Falcon notes or Transocean Sedco Forex notes
may be subject to information reporting and U.S. federal backup withholding tax
(currently at the rate of 30%) if the recipient of those payments fails to
supply an accurate taxpayer identification number or otherwise fails to comply
with applicable United States information reporting or certification
requirements. Any amount withheld from a payment to a U.S. holder under the
backup withholding rules is allowable as a credit against the holder's federal
income tax, provided that the required information is furnished to the IRS.
NON-U.S. HOLDERS
In general, backup withholding and information reporting will not apply to
consent payments and interest payments made on, or the proceeds of the sale or
other disposition of, the R&B Falcon notes or Transocean Sedco Forex notes if
the holder establishes by providing a certificate or, in some cases, by
providing other evidence, that the holder is not a U.S. person. Additional
exemptions are available for certain payments made outside the United States.
Non-U.S. holders of R&B Falcon notes or Transocean Sedco Forex notes should
consult their tax advisers regarding the application of information reporting
and backup withholding in their particular situations, the availability of
exemptions, and the procedure for obtaining such an exemption, if available. Any
amount withheld from a payment to a non-U.S. holder under the backup withholding
rules will be allowable as a credit against the holder's U.S. federal income
tax, provided that the required information is furnished to the IRS.
HOLDERS NOT TENDERING IN AN EXCHANGE OFFER
Although the matter is not entirely free from doubt, if you do not elect to
exchange your R&B Falcon notes for Transocean Sedco Forex notes pursuant to the
exchange offers, the proposed
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modifications to the R&B Falcon notes (see "The Proposed Amendments") should not
be treated as a taxable exchange of the R&B Falcon notes for new R&B Falcon
notes.
CAYMAN ISLANDS TAX CONSEQUENCES
According to our Cayman Islands counsel, Walkers, there is currently no
Cayman Islands income or profits tax, withholding tax, capital gains tax,
capital transfer tax, estate duty or inheritance tax payable by a holder in
respect of any income, gain or loss derived from holding notes. We have obtained
an undertaking from the Governor-in-Council of the Cayman Islands under the Tax
Concessions Law (1995 Revision), as amended, that, in the event that any
legislation is enacted in the Cayman Islands imposing tax on profits or income,
or on any capital assets, gain or appreciation, or any tax in the nature of
estate duty or inheritance tax, that tax will not apply to us or to any of our
operations or our shares, notes, debentures or other obligations until June 1,
2019. Therefore, there will be no Cayman Islands tax consequences with respect
to holding notes, except that, if the notes are taken into the Cayman Islands in
original form, they will be subject to stamp duty in the amount of one quarter
of one percent of the face value thereof, subject to a maximum of CI$250.00 per
note.
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TRANSOCEAN SEDCO FOREX
UNAUDITED PRO FORMA FINANCIAL INFORMATION
BACKGROUND
On January 31, 2001, Transocean Sedco Forex completed a merger transaction
with R&B Falcon Corporation. The merger was accounted for as a purchase with
Transocean Sedco Forex as the acquiror for accounting purposes.
SOURCES OF INFORMATION
Transocean Sedco Forex is providing the following pro forma financial
information concerning Transocean Sedco Forex to help you in your analysis of
the financial aspects of the exchange offers for properly tendered R&B Falcon
notes. We derived this information from the audited and unaudited financial
statements of Transocean Sedco Forex for the periods presented. The information
is only a summary, and you should read it in conjunction with the financial
information incorporated by reference in this prospectus and consent
solicitation statement. See "Where You Can Find More Information" beginning on
page iii.
HOW WE PREPARED THE UNAUDITED PRO FORMA FINANCIAL INFORMATION
The pro forma operating results data for the year ended December 31, 2000
and the nine months ended September 30, 2001 for Transocean Sedco Forex assume
that the merger with R&B Falcon and the exchange offers were completed on
January 1, 2000 and that all R&B Falcon notes were tendered by the applicable
consent payment deadline and not withdrawn.
If Transocean Sedco Forex had merged with R&B Falcon on the date assumed in
the pro forma financial statements, Transocean Sedco Forex might have performed
differently. You should not rely on the pro forma financial information as an
indication of the financial position or results of operations that Transocean
Sedco Forex would have achieved had the merger taken place earlier.
Transocean Sedco Forex prepared the pro forma combined financial
information for the R&B Falcon merger using the purchase method of accounting,
with Transocean Sedco Forex treated as the acquiror. As a result, the assets and
liabilities of R&B Falcon are recorded at fair value with the excess of the
purchase price over the sum of these fair values recorded as goodwill.
The balance sheet data for Transocean Sedco Forex reflects the effect of
the merger with R&B Falcon and assumes that the exchange offers were completed
on September 30, 2001. The balance sheet will be revised in an amendment to this
registration statement to reflect the inclusion of the consent payment and
payments made to third parties. The inclusion of the consent payments will be
shown as a reduction in Cash and Cash Equivalents and an increase in Other
Assets to be amortized over the life of the Transocean Sedco Forex notes newly
issued in exchange for the R&B Falcon notes. In connection with the exchange
offer, all payments made to third parties will be expensed in the period
incurred. The pro forma balance sheet will be revised in such amendment to
include an adjustment for such costs as a reduction in Cash and Cash Equivalents
and Shareholders' Equity.
73
TRANSOCEAN SEDCO FOREX INC.
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET
AS OF SEPTEMBER 30, 2001
PRO FORMA FOR
EXCHANGE
HISTORICAL OFFERS(7) PRO FORMA
---------- ------------- -----------
(IN MILLIONS)
Cash and Cash Equivalents......................... $ 351.0 $ [ ]7(a) $ [351.0]
Accounts Receivable............................... 727.4 -- 727.4
Other Current Assets.............................. 209.1 -- 209.1
--------- ------ -----------
Total Current Assets............................ 1,287.5 [ ] [1,287.5]
--------- ------ -----------
Property and Equipment, net....................... 8,600.0 -- 8,600.0
Goodwill, net..................................... 6,503.3 -- 6,503.3
Other Assets...................................... 477.2 [ ]7(b) [477.2]
--------- ------ -----------
Total Assets.................................... $16,868.0 $ [ ]7(c) $ [16,868.0]
========= ====== ===========
Current Liabilities............................... $ 838.4 $ -- $ 838.4
Long-Term Obligations............................. 4,645.1 -- 4,645.1
Deferred Taxes and Other Credits.................. 525.2 -- 525.2
Shareholders' Equity.............................. 10,859.3 [ ]7(c) [10,859.3]
--------- ------ -----------
Total Liabilities and Shareholders' Equity...... $16,868.0 $ [ ] $ [16,868.0]
========= ====== ===========
74
TRANSOCEAN SEDCO FOREX INC.
UNAUDITED CONDENSED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001
HISTORICAL PRO FORMA
----------------------------- --------------------------------------------------------
NINE MONTHS ONE MONTH
ENDED ENDED
SEPTEMBER 30, JANUARY 31,
2001 2001
------------- ------------- ELIMINATE
TRANSOCEAN RESULTS OF
SEDCO MARINE EXCHANGE
FOREX(6) R&B FALCON(6) ADJUSTMENTS(1) BUSINESS(2) OFFERS(5) COMBINED
------------- ------------- -------------- ----------- ----------- --------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Operating Revenues... $2,072.5 $ 128.6 $ -- $ (2.7) $ -- $2,198.4
Costs and Expenses
Operating and
Maintenance...... 1,163.5 156.0 -- (66.2) -- 1,253.3
Depreciation and
Amortization..... 461.7 17.9 16.81(a) (0.9) -- 495.5
General and
Administrative... 43.9 60.8 (58.0) 1(b) -- -- 46.7
-------- ------- ------ ------ ------ --------
Total Costs and
Expenses........... 1,669.1 234.7 (41.2) (67.1) -- 1,795.5
-------- ------- ------ ------ ------ --------
Gain from Sale of
Assets............. 29.0 -- -- -- -- 29.0
-------- ------- ------ ------ ------ --------
Operating Income..... 432.4 (106.1) 41.2 64.4 -- 431.9
Other Expense, net... (141.1) (19.1) 4.51(d) -- [ ] [(155.7)]
-------- ------- ------ ------ ------ --------
Income from
Continuing
Operations Before
Taxes, Minority
Interest and
Extraordinary
Items.............. 291.3 (125.2) 45.7 64.4 [ ] [276.2]
Income Tax
Expense............ 74.9 (34.0) 9.91(e) 22.6 [ ] [73.4]
Minority Interest.... 2.5 0.7 -- -- -- 3.2
-------- ------- ------ ------ ------ --------
Income from
Continuing
Operations Before
Extraordinary
Items.............. $ 213.9 $ (91.9) $ 35.8 $ 41.8 $ [ ] $ [199.6]
======== ======= ====== ====== ====== ========
Income from
Continuing
Operations before
Extraordinary Items
per Share
Basic.............. $ 0.70 $ 0.63
======== ========
Diluted............ $ 0.69 $ 0.62
======== ========
Weighted Average
Shares Outstanding
Basic.............. 305.2 12.03(a) 317.2
Diluted............ 310.7 12.73(b) 323.4
See Notes to the Transocean Sedco Forex Inc.
Unaudited Condensed Pro Forma Combined Financial Statements.
75
TRANSOCEAN SEDCO FOREX INC.
UNAUDITED CONDENSED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
HISTORICAL PRO FORMA
------------------------ -----------------------------------------------------------------------
ELIMINATE
CONFORMING RESULTS OF
TRANSOCEAN RECLASSIFI- MARINE EXCHANGE
SEDCO FOREX R&B FALCON CATIONS(4) ADJUSTMENTS(1) BUSINESS(2) OFFERS(5) COMBINED
----------- ---------- ----------- -------------- ----------- ----------- ---------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Operating Revenues........... $1,229.5 $1,052.1 $ 42.2 $ -- $(31.4) $ -- $ 2,292.4
Costs and Expenses
Operating and
Maintenance.............. 812.6 572.3 264.7 -- (25.8) -- 1,623.8
Depreciation and
Amortization............. 259.5 189.9 -- 228.21(a) (10.1) -- 667.5
General and
Administrative........... 42.1 61.3 (32.0) (4.1) 1(b) (5.4) -- 61.9
Merger Expenses............ -- 6.1 -- (6.1) 1(c) -- -- --
-------- -------- ------ ------- ------ ----- ---------
Total Costs and Expenses..... 1,114.2 829.6 232.7 218.0 (41.3) -- 2,353.2
-------- -------- ------ ------- ------ ----- ---------
Gain from Sale of Assets..... 17.8 -- 172.9 -- -- -- 190.7
-------- -------- ------ ------- ------ ----- ---------
Operating Income............. 133.1 222.5 (17.6) (218.0) 9.9 -- 129.9
Other Expense, net........... 11.3 (203.0) 17.6 50.71(d) 1.5 [ ] [(121.9)]
-------- -------- ------ ------- ------ ----- ---------
Income from Continuing
Operations Before Taxes,
Minority Interest and
Extraordinary Items........ 144.4 19.5 -- (167.3) 11.4 [ ] [8.0]
Income Tax Expense........... 36.7 48.8 -- (11.8) 1(e) 4.0 [ ] [77.7]
Minority Interest............ 0.6 28.7 -- (5.2) 1(f) -- -- 24.1
-------- -------- ------ ------- ------ ----- ---------
Loss from Continuing
Operations Before
Extraordinary Items........ 107.1 (58.0) -- (150.3) 7.4 [ ] [(93.8)]
Dividends and Accretion on
Preferred Shares........... -- 206.8 -- -- -- -- 206.8
-------- -------- ------ ------- ------ ----- ---------
Loss From Continuing
Operations Before
Extraordinary Items
Applicable to Ordinary
Shareholders............... $ 107.1 $ (264.8) $ -- $(150.3) $ 7.4 $[ ] $ [(300.6)]
======== ======== ====== ======= ====== ===== =========
Loss From Continuing
Operations Before
Extraordinary Items Per
Share Applicable to
Ordinary Shareholders......
Basic...................... $ 0.51 $ (1.35) $ (0.95)
======== ======== =========
Diluted.................... $ 0.50 $ (1.35) $ (0.95)
======== ======== =========
Weighted Average Shares
Outstanding
Basic...................... 210.4 196.6 106.13(a) 316.5
Diluted.................... 211.7 196.6 104.83(b) 316.5
See Notes to the Transocean Sedco Forex Inc.
Unaudited Condensed Pro Forma Combined Financial Statements.
76
TRANSOCEAN SEDCO FOREX INC.
NOTES TO UNAUDITED CONDENSED PRO FORMA COMBINED FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE AMOUNTS OR UNLESS OTHERWISE INDICATED)
(1) A summary of the pro forma adjustments to reflect the merger with R&B
Falcon are as follows:
(a) Depreciation and amortization -- A reconciliation of the pro forma
adjustment to depreciation and amortization is as follows:
DECEMBER 31, SEPTEMBER 30,
2000 2001
------------ -------------
Additional depreciation resulting from the
adjustment to fair value of R&B Falcon's
property and equipment and conforming
depreciable lives and salvage values...... $ 93.6 $ 5.4
Amortization of goodwill resulting from the
merger over a 40-year estimated life...... 134.6 11.4
------ -----
Total pro forma adjustment to depreciation
and amortization.......................... $228.2 $16.8
====== =====
(b) General and administrative -- For the year ended December 31,
2000, the adjustments result from the fair value adjustments of R&B
Falcon's defined benefit pension plans, other post retirement benefit plans
and the early vesting of restricted stock. For the nine months ended
September 30, 2001, the adjustments result from payment of an investment
advisory fee, termination benefits and a charge related to the accelerated
vesting of certain stock options and restricted stock grants in conjunction
with the merger with R&B Falcon.
(c) Merger costs -- Represents adjustments to merger costs incurred by
R&B Falcon in 2000.
(d) Other income (expense), net -- A reconciliation of the pro forma
adjustment to other income (expense), net is as follows:
DECEMBER 31, SEPTEMBER 30,
2000 2001
------------ -------------
Adjustment to interest expense resulting
from the fair value adjustment of R&B
Falcon's fixed rate debt.................. $54.8 $4.5
Elimination of historical Transocean Sedco
Forex equity in earnings of Arcade
Drilling.................................. (4.1) --
----- ----
Total pro forma adjustment to other income
(expense), net............................ $50.7 $4.5
===== ====
(e) Income tax expense -- Represents the incremental benefit from U.S.
income taxes related to pro forma adjustments. The amortization of goodwill
is assumed to be nondeductible for tax purposes
(f) Minority interest -- Represents the elimination of the portion of
R&B Falcon's minority interest relating to Arcade Drilling owned by
Transocean Sedco Forex.
(2) Represents the elimination of the results of operations of R&B Falcon's
marine support vessel business which was disposed of in connection with the
closing of the merger.
77
TRANSOCEAN SEDCO FOREX INC.
NOTES TO UNAUDITED CONDENSED PRO FORMA COMBINED
FINANCIAL STATEMENTS -- (CONTINUED)
(3) Net income (loss) per share applicable to ordinary shareholders:
(a) Basic -- For the year ended December 31, 2000, the adjustment to
pro forma basic weighted average shares outstanding represents the total
Transocean Sedco Forex shares issued to R&B Falcon's common shareholders in
the merger. For the nine months ended September 30, 2001, the adjustment
assumes the shares issued in the merger were outstanding for the entire
period.
(b) Diluted -- For the year ended December 31, 2000, diluted net loss
per share is the same as basic net loss per share. For the nine months
ended September 30, 2001, the adjustment to pro forma weighted average
shares outstanding represents the effect on the weighted average shares as
though the shares, options and warrants issued in conjunction with the
merger had been outstanding the entire period.
(4) Certain reclassifications were made to the operating results of R&B
Falcon to be consistent with Transocean Sedco Forex's format.
DECEMBER 31, SEPTEMBER 30,
2000 2001
------------ -------------
(5) Other Income (Expense), net -- Represents the
increase in interest expense associated with the
Exchange Offers (amounts to be included in an
amendment to this registration statement)......... $[ ] $ [ ]
===== =======
(6) The unaudited condensed pro forma combined statement of operations for
the nine months ended September 30, 2001 include eight months of operating
results for R&B Falcon.
(7) A summary of the pro forma adjustments to reflect the exchange offers.
(a) Represents the consent payments for R&B Falcon notes tendered by
the applicable consent payment deadline and not withdrawn and payments to
third parties in connection with the exchange offer.
(b) Represents the consent payments for R&B Falcon notes tendered by
the applicable consent payment deadline and not withdrawn to be amortized
over the life of the Transocean Sedco Forex notes newly issued in exchange
for the R&B Falcon notes.
(c) Represents the payments to third parties expensed as incurred in
connection with the exchange offer.
78
R&B FALCON CORPORATION
UNAUDITED PRO FORMA FINANCIAL INFORMATION
BACKGROUND
On August 17 and 19, 2001, R&B Falcon Corporation and one of its
subsidiaries sold in separate transactions nine drilling units to Transocean
Offshore International Ventures Limited, a subsidiary of Transocean Sedco Forex.
On January 31, 2001, Transocean Sedco Forex completed a merger transaction
with R&B Falcon Corporation. The merger was accounted for as a purchase with
Transocean Sedco Forex as the acquiror for accounting purposes.
SOURCES OF INFORMATION
R&B Falcon is providing the following pro forma financial information
concerning R&B Falcon to help you in your analysis of the financial aspects of
the exchange offers for properly tendered R&B Falcon notes. We derived this
information from the audited and unaudited financial statements of R&B Falcon
for the periods presented. The information is only a summary, and you should
read it in conjunction with the financial information incorporated by reference
in this prospectus and consent solicitation statement. See "Where You Can Find
More Information" beginning on page iii.
HOW WE PREPARED THE UNAUDITED PRO FORMA FINANCIAL INFORMATION
The pro forma operating results data for the year ended December 31, 2000,
the eight months ended September 30, 2001 and the one month ended January 31,
2001 for R&B Falcon assume the merger with Transocean Sedco Forex, the rig sales
and the exchange offers were completed on January 1, 2000 and that all R&B
Falcon notes were tendered by the applicable consent payment deadline and not
withdrawn.
The balance sheet data for R&B Falcon reflects the effect of the merger
with Transocean Sedco Forex and assumes that the exchange offers were completed
on September 30, 2001. The balance sheet will be revised in an amendment to this
registration statement to reflect the inclusion of the consent payment. The
inclusion of the consent payments will be shown as a reduction in Cash and Cash
Equivalents and an increase in Other Assets to be amortized over the life of the
Transocean Sedco Forex notes newly issued in exchange for the R&B Falcon notes.
79
R&B FALCON CORPORATION
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET
AS OF SEPTEMBER 30, 2001
(IN MILLIONS)
PRO FORMA FOR
EXCHANGE
HISTORICAL ADJUSTMENTS(5) PRO FORMA
---------- ---------------- ---------
Cash and Cash Equivalents...................... $ 111.0 $ [ ]5(a) $ [111.0]
Accounts Receivable............................ 339.3 -- 339.3
Other Current Assets........................... 80.0 -- 80.0
-------- --------- ---------
Total Current Assets......................... 530.3 [ ] [530.3]
-------- --------- ---------
Property and Equipment, net.................... 2,256.3 -- 2,256.3
Goodwill, net.................................. 5,503.4 -- 5,503.4
Other Assets................................... 722.0 [ ]5(a) [722.0]
-------- --------- ---------
Total Assets................................. $9,012.0 $ -- $ 9,012.0
======== ========= =========
Current Liabilities............................ $ 390.0 $ -- $ 390.0
Long-Term Obligations.......................... 1,731.9 (1,537.9)5(b) 194.0
Deferred Taxes and Other Credits............... 205.0 1,537.95(b) 1,742.9
Minority Interest.............................. 102.3 -- 102.3
Shareholders' Equity........................... 6,582.8 -- 6,582.8
-------- --------- ---------
Total Liabilities and Shareholders' Equity... $9,012.0 $ -- $ 9,012.0
======== ========= =========
80
R&B FALCON CORPORATION
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001
HISTORICAL
---------------------------
EIGHT MONTHS ONE MONTH
ENDED ENDED PRO FORMA PRO FORMA SALE
SEPTEMBER 30, JANUARY 31, MERGER OF DRILLING UNITS EXCHANGE
2001 2001 ADJUSTMENTS(1) SUBTOTAL ADJUSTMENTS(3) OFFERS PRO FORMA
------------- ----------- -------------- -------- ----------------- -------- ---------
(IN MILLIONS)
Operating
Revenues........... $925.0 $ 128.6 $ (2.7) 1(a) $1,050.9 $ -- $ -- $1,050.9
------ ------- ------- -------- ------ ----- --------
Costs and Expenses
Operating and
Maintenance...... 536.3 156.0 (66.2) 1(b) 626.1 109.7 -- 735.8
Depreciation and
Amortization..... 257.5 17.9 15.91(c) 291.3 (30.0) -- 261.3
General and
Administrative... 6.1 60.8 (58.0) 1(d) 8.9 -- -- 8.9
------ ------- ------- -------- ------ ----- --------
Total Costs and
Expenses....... 799.9 234.7 (108.3) 926.3 79.7 -- 1,006.0
------ ------- ------- -------- ------ ----- --------
Loss from Sale of
Assets............. (56.7) -- -- (56.7) -- -- (56.7)
------ ------- ------- -------- ------ ----- --------
Operating Loss....... 68.4 (106.1) 105.6 67.9 (79.7) -- (11.8)
Other Expense, net... (88.8) (19.1) 4.51(f) (103.4) 47.3 [ ] [(56.1)]
------ ------- ------- -------- ------ ----- --------
Loss from Continuing
Operations Before
Taxes, Minority
Interest and
Extraordinary
Items.............. (20.4) (125.2) 110.1 (35.5) (32.4) [ ] [(67.9)]
Income Tax
Expense............ 34.5 (34.0) 32.51(g) 33.0 (11.3) [ ] [21.7]
Minority Interest.... 0.8 0.7 -- 1.5 -- -- 1.5
------ ------- ------- -------- ------ ----- --------
Loss from Continuing
Operations Before
Extraordinary
Items.............. $(55.7) $ (91.9) $ 77.6 $ (70.0) $(21.1) $[ ] $ [(91.1)]
====== ======= ======= ======== ====== ===== ========
See Notes to the R&B Falcon Corporation
Unaudited Condensed Consolidated Pro Forma Financial Statements.
81
R&B FALCON CORPORATION
UNAUDITED CONDENSED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
PRO FORMA
CONFORMING PRO FORMA SALE OF
RECLASSIFI- MERGER DRILLING UNITS EXCHANGE
HISTORICAL CATIONS(2) ADJUSTMENTS(1) SUBTOTAL ADJUSTMENTS(3) OFFERS(4) PRO FORMA
---------- ----------- -------------- -------- -------------- --------- ---------
IN MILLIONS
Operating Revenues............. $1,052.1 $ 42.2 $ (31.4) 1(a) $1,062.9 $ -- $ -- $ 1,062.9
Costs and Expenses
Operating and Maintenance.... 572.3 264.7 (25.8) 1(b) 811.2 87.3 -- 898.5
Depreciation and
Amortization............... 189.9 -- 218.11(c) 408.0 (40.5) -- 367.5
General and Administrative... 61.3 (32.0) (9.5) 1(d) 19.8 -- -- 19.8
Merger Expenses.............. 6.1 -- (6.1) 1(e) -- -- -- --
-------- ------ ------- -------- ------ ----- ---------
Total Costs and Expenses..... 829.6 232.7 176.7 1,239.0 46.8 -- 1,285.8
Gain from Sale of Assets....... -- 172.9 -- 172.9 -- -- 172.9
-------- ------ ------- -------- ------ ----- ---------
Operating Loss................. 222.5 (17.6) (208.1) (3.2) (46.8) -- (50.0)
Other Expense, net............. (203.0) 17.6 56.31(f) (129.1) 53.7 [ ] [(75.4)]
-------- ------ ------- -------- ------ ----- ---------
Loss Before Income Taxes and
Minority Interest............ 19.5 -- (151.8) (132.3) 6.9 [ ] [(125.4)]
Income Tax Expense............. 48.8 -- (7.8) 1(g) 41.0 2.4 [ ] [43.4]
Minority Interest.............. 28.7 -- -- 28.7 -- -- 28.7
-------- ------ ------- -------- ------ ----- ---------
Net Loss....................... (58.0) -- (144.0) (202.0) 4.5 [ ] [(197.5)]
Dividends and Accretion on
Preferred Stock.............. 206.8 -- -- 206.8 -- -- 206.8
-------- ------ ------- -------- ------ ----- ---------
Loss from Continuing Operations
Applicable to Common
Shareholders................. $ (264.8) $ -- $(144.0) $ (408.8) $ 4.5 $[ ] $ [(404.3)]
======== ====== ======= ======== ====== ===== =========
See Notes to the R&B Falcon Corporation
Unaudited Condensed Consolidated Pro Forma Financial Statements.
82
R&B FALCON CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
(AMOUNTS IN MILLIONS)
(1) A summary of the pro forma adjustments to effect the merger is as
follows:
(a) Operating revenues -- Represents the results of operations of R&B
Falcon's marine support vessel business which was disposed of in connection
with the closing of the merger.
(b) Operating and maintenance -- Represents the results of operations
of R&B Falcon's marine support vessel business which was disposed of in
connection with the closing of the merger.
(c) Depreciation and amortization -- A reconciliation of the pro forma
adjustment to depreciation and amortization is as follows:
DECEMBER 31, SEPTEMBER 30,
2000 2001
------------ -------------
Additional depreciation resulting from the
adjustment to fair value of R&B Falcon's
property and equipment and conforming
depreciable lives and salvage values...... $ 93.6 $ 5.4
Amortization of goodwill resulting from the
merger over a 40-year estimated life...... 134.6 11.4
Elimination of the results of operations of
R&B Falcon's marine support vessel
business disposed of in connection with
the closing of the merger................. (10.1) (0.9)
------ -----
Total pro forma adjustment to depreciation
and amortization.......................... $218.1 $15.9
====== =====
(d) General and administrative -- For the year ended December 31,
2001, the adjustments result from the fair value adjustments of R&B
Falcon's defined benefit pension plans, other post retirement benefit plans
and the early vesting of restricted stock and the elimination of the
results of operations of R&B Falcon's marine support vessel business which
was disposed of in connection with the closing of the merger. For the nine
months ended September 30, 2001, the adjustments result from payment of an
investment advisory fee, termination benefits and a charge related to the
accelerated vesting of certain stock options and restricted stock grants in
conjunction with the merger with Transocean Sedco Forex.
(e) Merger costs -- Represents adjustments to merger costs incurred by
R&B Falcon in 2000.
(f) Other income (expense), net -- A reconciliation of the pro forma
adjustment to other income (expense), net is as follows:
DECEMBER 31, SEPTEMBER 30,
2000 2001
------------ -------------
Adjustment to interest expense resulting
from the fair value adjustment of R&B
Falcon's fixed rate debt.................. $54.8 $4.5
Elimination of R&B Falcon's marine support
vessel business disposed of in connection
with the closing of the merger............ 1.5 --
----- ----
Total pro forma adjustment to other
income.................................... $56.3 $4.5
===== ====
83
R&B FALCON CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED PRO FORMA
FINANCIAL STATEMENTS -- (CONTINUED)
(g) Income tax expense -- Represents the incremental benefit from U.S.
income taxes related to pro forma adjustments and the elimination of the
results of operations of R&B Falcon's marine support vessel business which
was disposed of in connection with the closing of the merger. The
amortization of goodwill is assumed to be nondeductible for tax purposes.
(2) Certain reclassifications were made to the operating results of R&B
Falcon to be consistent with Transocean Sedco Forex's format.
(3) Represents the pro forma reduction of depreciation expense, increase in
charter hire expense, reduction in interest expense and related income tax
effect associated with the sale of the Drilling Units.
DECEMBER 31, SEPTEMBER 30,
2000 2001
------------ -------------
(4) Other Income (Expense), net represents the
increase in interest expense associated with the
exchange offers (amounts to be included in an amendment
to this registration statement)......................... $[ ] $[ ]
====== ======
(5) A summary of the pro forma adjustments to reflect the exchange offers.
(a) Represents the consent payments for R&B Falcon notes tendered by
the applicable consent payment deadline and not withdrawn to be amortized
over the life of the Transocean Sedco Forex notes newly issued in exchange
for the R&B Falcon notes.
(b) Represents the R&B Falcon notes exchanged for intercompany notes
payable to Transocean Sedco Forex.
84
VALIDITY OF NOTES
Certain legal matters in connection with the Transocean Sedco Forex notes
offered in the exchange offers will be passed upon for us by our General
Counsel, Eric B. Brown, and by our outside counsel, Baker Botts L.L.P., Houston,
Texas. Walkers, Cayman Islands, will pass upon certain matters for us relating
to Cayman Islands law. The validity of the Transocean Sedco Forex notes offered
in the exchange offers will be passed upon for the dealer managers by Sullivan &
Cromwell, New York, New York.
EXPERTS
The consolidated balance sheets of Transocean Sedco Forex Inc. and its
subsidiaries as of December 31, 2000 and 1999, and the related consolidated
statements of operations, equity, and cash flows for the year ended December 31,
2000, and the related combined statements of operations, equity, and cash flows
for the year ended December 31, 1999 (and the related financial statement
schedule) appearing in Transocean Sedco Forex's Annual Report (Form 10-K) for
the year ended December 31, 2000, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such report given on the authority of such
firm as experts in accounting and auditing.
The financial statements of Transocean Sedco Forex Inc. (previously Sedco
Forex Holdings Limited) for the year ended December 31, 1998 incorporated in
this prospectus by reference to the Transocean Sedco Forex Inc. Annual Report on
Form 10-K for the year ended December 31, 2000 have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
The consolidated balance sheets of R&B Falcon as of December 31, 2000 and
1999 and the related consolidated statements of operations, cash flows and
stockholders' equity for each of the three years in the period ended December
31, 2000, incorporated by reference in this prospectus and consent solicitation
statement and elsewhere in this registration statement, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said report.
85
In order to tender, a holder of R&B Falcon notes should send or deliver a
properly completed and signed letter of transmittal and consent and any other
required documents to the exchange agent at its address set forth below or
tender pursuant to DTC's Automated Tender Offer Program.
The exchange agent for the exchange offers and consent solicitations is:
MELLON INVESTOR SERVICES LLC
By Mail: By Hand: By Overnight Delivery:
Reorganization Department Reorganization Department Reorganization Department
P. O. Box 3301 120 Broadway 85 Challenger Road
South Hackensack, NJ 07606 13th Floor Mail Stop -- Reorg
New York, New York 10271 Ridgefield Park, NJ 07660
By Facsimile Transmission:
(For Eligible Institutions only)
(201) 296-4293
Confirm facsimile by telephone only:
(201) 296-4860
Any questions or requests for assistance or for additional copies of this
prospectus and consent solicitation statement, the letter of transmittal and
consent or related documents may be directed to the information agent at the
telephone numbers listed below. You may also contact the dealer managers at
their telephone number set forth below or your custodian bank, depositary,
broker, trust company or other nominee for assistance concerning the exchange
offers and consent solicitations.
The information agent for the exchange offers and consent solicitations is:
MELLON INVESTOR SERVICES LLC
44 Wall Street -- 7th Floor
New York, NY 10005
Attn: Grainne McIntyre
Toll Free: (877) 698-6865
Banks and brokers: (917) 320-6286
The dealer managers for the exchange offers and consent solicitations are:
GOLDMAN, SACHS & CO.
85 Broad Street
New York, New York 10004
Toll Free: (800) 828-3182
86
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 34.1 of the Company's Articles of Association provides that:
No directors will be personally liable to the Company or, if any, its
members for monetary damages for breach of fiduciary duty as a director, except
for liability (i) for any breach of the director's duty of loyalty to the
Company or, if any, to its members, (ii) for acts or omissions not in good faith
or that involve intentional misconduct or a knowing violation of law or (iii)
for any transaction from which the director derived an improper personal
benefit.
The Company will indemnify, to the fullest extent permitted by the laws of
the Cayman Islands as from time to time in effect, if any, any person who was or
is a party or is threatened to be made a party to, or otherwise requires
representation by counsel in connection with, any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (whether or not an action by or in the right of the Company) by
reason of the fact that he is or was a director or officer of the Company, or,
while serving as a director or officer of the Company, is or was serving at the
request of the Company, as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or by reason
of any action alleged to have been taken or omitted in such capacity. The right
to indemnification conferred by Section 34.1 also includes the right of such
persons to be paid in advance by the Company for their expenses to the fullest
extent permitted by the laws of the Cayman Islands as from time to time in
effect.
Unless otherwise determined by the Company's board of directors, the
Company will indemnify to the fullest extent permitted by the laws of the Cayman
Islands as from time to time in effect, if any, any person who was or is a party
or is threatened to be made a party to, or otherwise requires representation by
counsel in connection with, any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (whether or
not an action by or in the right of the Company), by reason of the fact that he
is or was an employee (other than an officer) or agent of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, or by reason of any action alleged to have
been taken or omitted in such capacity.
The rights and authority conferred by Section 34.1 are not exclusive of any
other right that any person has or hereafter acquires under any law, provision
of the Company's Articles of Association or Memorandum of Association,
agreement, vote of members of the Company or of the board of directors of the
Company or otherwise.
The Company also has directors and officers liability insurance that would
indemnify its directors and officers against damages arising out of certain
kinds of claims that might be made against them based on their negligent acts or
omissions while acting in their capacity as such.
Agreements that may be entered into with underwriters, dealers and agents
who participate in the distribution of securities of the Company may contain
provisions relating to the indemnification of the Company's officers and
directors.
See "Item 22. Undertakings" for a description of the SEC's position
regarding the indemnification of directors and officers for liabilities arising
under the Securities Act.
II-1
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
The following instruments and documents are included as Exhibits to this
Registration Statement. Exhibits incorporated by reference are indicated below.
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
+1.1 -- Form of Dealer Managers Agreement between Transocean Sedco
Forex and Goldman, Sachs & Co.
++2.1 -- Agreement and Plan of Merger dated as of August 19, 2000 by
and among Transocean Sedco Forex, Transocean Holdings Inc.,
TSF Delaware Inc. and R&B Falcon Corporation (incorporated
by reference to Annex A to the Joint Proxy Statement/
Prospectus dated October 30, 2000 included in a 424(b)(3)
prospectus filed by Transocean Sedco Forex on November 1,
2000)
++4.1 -- Memorandum of Association of Transocean Sedco Forex, amended
(incorporated by reference to Annex E to the joint proxy
statement/prospectus dated October 30, 2000 included in a
424(b)(3) prospectus filed by Transocean Sedco Forex on
November 1, 2000)
++4.2 -- Articles of Association of Transocean Sedco Forex, as
amended (incorporated by reference to Annex F to the joint
proxy statement/prospectus dated October 30, 2000 included
in a 424(b)(3) prospectus filed by Transocean Sedco Forex on
November 1, 2000)
++4.3 -- Indenture dated as of April 15, 1997 between Transocean
Offshore Inc., a Delaware corporation
("Transocean-Delaware") and Chase Bank of Texas, National
Association, as trustee (incorporated by reference to
Exhibit 4.1 to the Transocean-Delaware Current Report on
Form 8-K dated April 29, 1997)
++4.4 -- First Supplemental Indenture dated as of April 15, 1997
between Transocean-Delaware and Chase Bank of Texas,
National Association, as trustee (incorporated by reference
to Exhibit 4.2 to Transocean-Delaware's Current Report on
Form 8-K dated April 29, 1997)
++4.5 -- Second Supplemental Indenture dated as of May 14, 1999
between Transocean Offshore (Texas) Inc.,
Transocean-Delaware and Chase Bank of Texas, National
Association, as trustee (incorporated by reference to
Exhibit 4.1 to Transocean Offshore Inc.'s Post-Effective
Amendment No. 1 to Registration Statement on Form S-3
(Registration No. 333-59001-99))
++4.6 -- Third Supplemental Indenture dated as of May 24, 2000
between Transocean Sedco Forex and Chase Bank of Texas,
National Association, as trustee (incorporated by reference
to Exhibit 4.1 to Transocean Sedco Forex's Current Report on
Form 8-K dated May 24, 2000)
++4.7 -- Fourth Supplemental Indenture dated as of May 11, 2001
between Transocean Sedco Forex and The Chase Manhattan Bank,
as trustee (incorporated by reference to Exhibit 4.1 to
Transocean Sedco Forex's Current Report on Form 8-K dated
May 8, 2001)
4.8 -- Agreement of Resignation, Appointment and Acceptance dated
as of January 15, 2002 by and among Transocean Sedco Forex,
JPMorgan Chase Bank and The Bank of New York related to the
Indenture dated as of April 15, 1997, as supplemented
+4.9 -- Form of Officer's Certificate of Transocean Sedco Forex
establishing the terms of the Transocean Sedco Forex notes
(including form of 6.50% Notes Due 2003 attached as Exhibit
C thereto, 6.75% Notes Due 2005 attached as Exhibit E
thereto, 6.95% Notes Due 2008 attached as Exhibit G thereto,
7.375% Notes Due 2018 attached as Exhibit I thereto, 9.125%
Notes Due 2003 attached as Exhibit K thereto and 9.50% Notes
Due 2008 attached as Exhibit M thereto)
II-2
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
++4.10 -- Indenture dated as of April 14, 1998 between R&B Falcon
Corporation, a Delaware corporation ("R&B Falcon"), and
Chase Bank of Texas, National Association, as trustee
(incorporated by reference to Exhibit 4.7 to R&B Falcon's
Registration Statement on Form S-4 (Registration No.
333-56821))
++4.11 -- Indenture dated as of December 22, 1998 between R&B Falcon
and Chase Bank of Texas, National Association, as trustee
(incorporated by reference to Exhibit 4.8 to R&B Falcon's
10-K dated March 30, 1999)
4.12 -- Agreement of Resignation, Appointment and Acceptance dated
as of January 15, 2002 by and among R&B Falcon Corporation,
JPMorgan Chase Bank and The Bank of New York related to the
R&B Falcon indenture dated as of April 14, 1998
4.13 -- Agreement of Resignation, Appointment and Acceptance dated
as of January 15, 2002 by and among R&B Falcon Corporation,
JPMorgan Chase Bank and The Bank of New York related to the
R&B Falcon indenture dated as of December 22, 1998
+4.14 -- Form of Supplemental Indenture to the Indenture dated as of
April 14, 1998 between R&B Falcon and The Bank of New York
+4.15 -- Form of Supplemental Indenture to the Indenture dated as of
December 22, 1998 between R&B Falcon and The Bank of New
York
+5.1 -- Opinion of Baker Botts L.L.P. regarding the legality of the
securities
+8.1 -- Opinion of Baker Botts L.L.P. regarding material U.S.
federal income tax consequences
+8.2 -- Opinion of Walkers, Cayman Islands regarding Cayman Islands
tax consequences
12.1 -- Transocean Sedco Forex Inc. statement of computation of
ratio of earnings to fixed charges
12.2 -- R&B Falcon Corporation statement of computation of ratio of
earnings to fixed charges
23.1 -- Consent of Ernst & Young LLP
23.2 -- Consent of PricewaterhouseCoopers LLP
23.3 -- Consent of Arthur Andersen LLP
+23.4 -- Consent of Baker Botts L.L.P. (included in Exhibits 5.1 and
8.1)
+23.5 -- Consent of Walkers, Cayman Islands (included in Exhibit 8.2)
24 -- Powers of Attorney
25.1 -- Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of The Bank of New York, as trustee
+99.1 -- Form of Letter of Transmittal
+99.2 -- Form of Letter to Depository Trust Company Participants
+99.3 -- Form of Letter to Beneficial Owners
---------------
+ To be filed by amendment.
++ Incorporated by reference as indicated.
(B) FINANCIAL STATEMENT SCHEDULES
Not applicable.
II-3
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless, in the opinion of its counsel, the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
(c) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
(d) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, the State of
Texas, on January 18, 2002.
TRANSOCEAN SEDCO FOREX INC.
By: /s/ GREGORY L. CAUTHEN
------------------------------------
Gregory L. Cauthen
Vice President, Chief Financial
Officer and Treasurer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON JANUARY 18, 2002.
SIGNATURE TITLE
--------- -----
* Chairman of the Board of Directors
------------------------------------------------
Victor E. Grijalva
/s/ J. MICHAEL TALBERT Chief Executive Officer and Director (Principal
------------------------------------------------ Executive Officer)
J. Michael Talbert
/s/ GREGORY L. CAUTHEN Vice President, Chief Financial Officer and
------------------------------------------------ Treasurer (Principal Financial Officer)
Gregory L. Cauthen
/s/ RICARDO H. ROSA Vice President and Controller (Principal
------------------------------------------------ Accounting Officer)
Ricardo H. Rosa
* Director
------------------------------------------------
Richard D. Kinder
* Director
------------------------------------------------
Ronald L. Kuehn, Jr.
* Director
------------------------------------------------
Arthur Lindenauer
* Director
------------------------------------------------
Paul B. Loyd, Jr.
* Director
------------------------------------------------
Martin B. McNamara
* Director
------------------------------------------------
Roberto Monti
II-5
SIGNATURE TITLE
--------- -----
* Director
------------------------------------------------
Richard A. Pattarozzi
* Director
------------------------------------------------
Alain Roger
* Director
------------------------------------------------
Kristian Siem
* Director
------------------------------------------------
Ian C. Strachan
*By: /s/ WILLIAM E. TURCOTTE
------------------------------------------
William E. Turcotte
(Attorney-in-Fact)
II-6
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
+1.1 -- Form of Dealer Managers Agreement between Transocean Sedco
Forex and Goldman, Sachs & Co.
++2.1 -- Agreement and Plan of Merger dated as of August 19, 2000 by
and among Transocean Sedco Forex, Transocean Holdings Inc.,
TSF Delaware Inc. and R&B Falcon Corporation (incorporated
by reference to Annex A to the Joint Proxy Statement/
Prospectus dated October 30, 2000 included in a 424(b)(3)
prospectus filed by Transocean Sedco Forex on November 1,
2000)
++4.1 -- Memorandum of Association of Transocean Sedco Forex, amended
(incorporated by reference to Annex E to the joint proxy
statement/prospectus dated October 30, 2000 included in a
424(b)(3) prospectus filed by Transocean Sedco Forex on
November 1, 2000)
++4.2 -- Articles of Association of Transocean Sedco Forex, as
amended (incorporated by reference to Annex F to the joint
proxy statement/prospectus dated October 30, 2000 included
in a 424(b)(3) prospectus filed by Transocean Sedco Forex on
November 1, 2000)
++4.3 -- Indenture dated as of April 15, 1997 between Transocean
Offshore Inc., a Delaware corporation
("Transocean-Delaware") and Chase Bank of Texas, National
Association, as trustee (incorporated by reference to
Exhibit 4.1 to the Transocean-Delaware Current Report on
Form 8-K dated April 29, 1997)
++4.4 -- First Supplemental Indenture dated as of April 15, 1997
between Transocean-Delaware and Chase Bank of Texas,
National Association, as trustee (incorporated by reference
to Exhibit 4.2 to Transocean-Delaware's Current Report on
Form 8-K dated April 29, 1997)
++4.5 -- Second Supplemental Indenture dated as of May 14, 1999
between Transocean Offshore (Texas) Inc.,
Transocean-Delaware and Chase Bank of Texas, National
Association, as trustee (incorporated by reference to
Exhibit 4.1 to Transocean Offshore Inc.'s Post-Effective
Amendment No. 1 to Registration Statement on Form S-3
(Registration No. 333-59001-99))
++4.6 -- Third Supplemental Indenture dated as of May 24, 2000
between Transocean Sedco Forex and Chase Bank of Texas,
National Association, as trustee (incorporated by reference
to Exhibit 4.1 to Transocean Sedco Forex's Current Report on
Form 8-K dated May 24, 2000)
++4.7 -- Fourth Supplemental Indenture dated as of May 11, 2001
between Transocean Sedco Forex and The Chase Manhattan Bank,
as trustee (incorporated by reference to Exhibit 4.1 to
Transocean Sedco Forex's Current Report on Form 8-K dated
May 8, 2001)
4.8 -- Agreement of Resignation, Appointment and Acceptance dated
as of January 15, 2002 by and among Transocean Sedco Forex,
JPMorgan Chase Bank and The Bank of New York related to the
Indenture dated as of April 15, 1997, as supplemented
+4.9 -- Form of Officer's Certificate of Transocean Sedco Forex
establishing the terms of the Transocean Sedco Forex notes
(including form of 6.50% Notes Due 2003 attached as Exhibit
C thereto, 6.75% Notes Due 2005 attached as Exhibit E
thereto, 6.95% Notes Due 2008 attached as Exhibit G thereto,
7.375% Notes Due 2018 attached as Exhibit I thereto, 9.125%
Notes Due 2003 attached as Exhibit K thereto and 9.50% Notes
Due 2008 attached as Exhibit M thereto)
++4.10 -- Indenture dated as of April 14, 1998 between R&B Falcon
Corporation, a Delaware corporation ("R&B Falcon"), and
Chase Bank of Texas, National Association, as trustee
(incorporated by reference to Exhibit 4.7 to R&B Falcon's
Registration Statement on Form S-4 (Registration No.
333-56821))
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
++4.11 -- Indenture dated as of December 22, 1998 between R&B Falcon
and Chase Bank of Texas, National Association, as trustee
(incorporated by reference to Exhibit 4.8 to R&B Falcon's
10-K dated March 30, 1999)
4.12 -- Agreement of Resignation, Appointment and Acceptance dated
as of January 15, 2002 by and among R&B Falcon Corporation,
JPMorgan Chase Bank and The Bank of New York related to the
R&B Falcon indenture dated as of April 14, 1998
4.13 -- Agreement of Resignation, Appointment and Acceptance dated
as of January 15, 2002 by and among R&B Falcon Corporation,
JPMorgan Chase Bank and The Bank of New York related to the
R&B Falcon indenture dated as of December 22, 1998
+4.14 -- Form of Supplemental Indenture to the Indenture dated as of
April 14, 1998 between R&B Falcon and The Bank of New York
+4.15 -- Form of Supplemental Indenture to the Indenture dated as of
December 22, 1998 between R&B Falcon and The Bank of New
York
+5.1 -- Opinion of Baker Botts L.L.P. regarding the legality of the
securities
+8.1 -- Opinion of Baker Botts L.L.P. regarding material U.S.
federal income tax consequences
+8.2 -- Opinion of Walkers, Cayman Islands regarding Cayman Islands
tax consequences
12.1 -- Transocean Sedco Forex Inc. statement of computation of
ratio of earnings to fixed charges
12.2 -- R&B Falcon Corporation statement of computation of ratio of
earnings to fixed charges
23.1 -- Consent of Ernst & Young LLP
23.2 -- Consent of PricewaterhouseCoopers LLP
23.3 -- Consent of Arthur Andersen LLP
+23.4 -- Consent of Baker Botts L.L.P. (included in Exhibits 5.1 and
8.1)
+23.5 -- Consent of Walkers, Cayman Islands (included in Exhibit 8.2)
24 -- Powers of Attorney
25.1 -- Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of The Bank of New York, as trustee
+99.1 -- Form of Letter of Transmittal
+99.2 -- Form of Letter to Depository Trust Company Participants
+99.3 -- Form of Letter to Beneficial Owners
---------------
+ To be filed by amendment.
++ Incorporated by reference as indicated.