Source: Rowan Companies, Inc.
Rowan Companies, Inc. (NYSE: RDC) today announced that its Board of Directors has unanimously approved a plan to change the Company's corporate structure. The proposed plan is designed to enhance shareholder value by improving Rowan's long-term competitive position as a global contract driller.
Under the proposed plan, the Company's legal domicile would change from Delaware to the United Kingdom (U.K.), where the Company already has substantial and growing operations. The offshore drilling industry is a global business and Rowan has been evolving into a much more geographically diversified company. This change aligns the Company's structure with its significant shift in strategic focus toward key global markets over the past decade, as well as the central role of its U.K. base to Rowan's management and oversight of its global operations. The Company estimates approximately 81 percent of revenue will be derived from non-U.S. operations in 2012, compared with just ten percent in 2004.
By making the Company more competitive and enhancing its ability to reinvest in its business, Rowan expects that over the long term the proposed plan will lead to further growth and job creation in the U.S. and globally. This plan will have no effect on employees' jobs, wages, or current benefits.
Rowan's Board of Directors believes the plan reflects and reinforces many operating benefits from its growing base of activity in the U.K., including:
•Improving access to key customers in the U.K., Europe and Egypt, which collectively comprise 59 percent of Rowan's contract backlog;
•Enhancing the Company's ability to further expand in the North Sea and other markets by continuing to build an efficient shore base from which to reach its rigs and communicate with key customers in those important markets;
•Improving the general perception with customers and the investment community that Rowan is a global contract driller with an increasing focus on international markets, which generally offer longer-term contracts, a stronger backlog and more predictable cash flow; and
•Allowing Rowan, over the long term, to remain competitive with the effective tax rates of its global competitors, most of which are domiciled outside the U.S.
W. Matt Ralls, President and Chief Executive Officer, commented, "The offshore drilling industry is a global business and we have been evolving into a much more geographically diversified company. With this change in our structure, we formally recognize that the base of operations we first established in the U.K. more than three decades ago is now a central and efficient location from which we manage the markets that will be our largest source of revenue this year. The changes we are making will increase shareholder value over time by improving our competitiveness as a global contract driller and by giving us greater flexibility to manage our global operations. Our industry has already moved in this direction, and over the long term, by making the Company even more competitive, we can grow and reinvest in our business, leading to the creation of more high-paying jobs both in the U.S. and in the other markets we serve."
In order to put in place the change in corporate structure, the plan provides that the Company would consummate a merger with one of its subsidiaries. As a result of the merger, all common stock of the Company - including shares granted under the Company's equity based incentive plans -- will be exchanged for American depositary shares ("ADS") of its new U.K. parent company - a newly formed English public limited company to be named "Rowan Companies plc" ("Rowan UK"). ADS will represent Class A Ordinary Shares of Rowan UK. Upon completion of the merger, Rowan's business and operations will continue in substantially the same manner except that Rowan UK will be the parent company of the Rowan group of companies. Rowan will submit an application to the New York Stock Exchange ("NYSE") and anticipates that, immediately following the effective time of the merger, the ADS will be listed on the NYSE under the symbol "RDC," the current symbol for Rowan Delaware common stock. The plan is subject to stockholder approval and other conditions, including receipt of applicable consents and approvals. The Company currently anticipates that it will complete the proposed change in corporate structure by late spring.
Rowan UK will remain subject to U.S. Securities and Exchange Commission ("SEC") reporting requirements, the mandates of the Sarbanes-Oxley Act and the applicable corporate governance rules of the NYSE. The Company will continue to report its financial results in U.S. dollars under U.S. generally accepted accounting principles.
Rowan announces proposed change in corporate structure
Source: Rowan Companies, Inc.