Transocean’s $1.5 Billion Restructuring Survives Hedge-Fund Lawsuit

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A federal judge upheld a $1.5 billion debt restructuring by offshore-drilling contractor Transocean Ltd. , ruling against a hedge-fund bondholder that claimed it was treated unfairly as the company took steps to survive a turbulent oil market.

Judge George B. Daniels of the U.S. District Court in New York rejected efforts by Whitebox Advisors LLC to call a debt default against Transocean during a painful period for deep-water drilling that has sent several peer companies to bankruptcy.

Transocean has stayed afloat in part through a September bond exchange covering roughly $1.5 billion in debt that shaved some $826 million from the company’s balance sheet. Whitebox and Pacific Investment Management Co. held out, objecting to the exchange and saying their claims against some Transocean assets had been weakened in violation of debt contracts.

In September, they told Transocean they believed the restructuring amounted to a default and sued the company. The default notice gave the company 90 days, until Dec. 1, to resolve the allegation or else risk accelerated bond repayments, the loss of bank credit and a forced bankruptcy filing.

The company denied it was in default and called the allegations baseless. Still, with the Dec. 1 deadline looming, Transocean unwound some asset-shifting maneuvers that Whitebox had complained about. The company said that resolved the alleged default before the cure period lapsed and investors could take action.



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