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Family behind oil drilling business reduces stake

The Fredriksen family, which controls deepwater drilling company Seadrill, has reduced its stake in the business, in an attempt to shore up its cash reserves to diversify the family’s other interests.
The Fredriksen family has reduced its stake in Seadrill, its deepwater drilling business © Seadrill

The Fredriksen family, which controls deepwater drilling company Seadrill, has reduced its stake in the business, in an attempt to shore up its cash reserves to diversify the family’s other interests.

That’s according to a statement by the Bermuda-based group, which said the family, through investment vehicle Hemen Holding, has cut its stake to 23% from 28%.

This was through the sale of 24 million shares in Seadrill to investors, priced at 235.14 Norwegian krone (€31.67) per share, said the company, which is listed on the Oslo and New York stock exchanges.

“[The 28% stake] represents a disproportionately large part of the Fredriksen group’s investment portfolio,” said the release.

But it added that the head of the family business, chairman John Fredriksen, will remain “committed” to the “successful development of Seadrill over the long term”.

The move comes as the family, which is also the largest shareholder in tanker-owning company Frontline, looks to diversify its investment portfolio, said Seadrill. By selling some of its stake, the family will be able to fund the purchase of new ships, which could reportedly be worth around $3 billion (€2.27 billion), for Frontline.

The statement further added that the family is looking to use the sale proceeds for consolidation and buying “distressed asset companies”.

However, the family could also regain its full stake, thanks to a put option deal with Goldman Sachs. As per the agreement, the investment bank has the option to sell shares back to Hemen Holding, at a slightly lower rate, within the next 90 days. If Goldman Sachs goes ahead with this, then the family’s stake will again rise to 28%.

The announcement came in the wake of the release of Seadrill’s fourth-quarter revenues, which rose to $1.05 billion from $1.02 billion the previous quarter.

Seadrill, which operates oil tankers, tender rigs and drill ships, also reported preliminary sales figures of $4.19 billion for 2011, up from around $4 billion the year before.

Fredriksen’s daughter Katherine sits on the board of Seadrill, while another daughter, Cecilie, is a director at Frontline.

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