Put options prove their worth in complex Seadrill sale

14 Jun 2012

When shipping magnate John Fredriksen sold $1bn of stock in his oil rigs firm Seadrill at the beginning of March, he did so by offering a package of put options to give investors downside protection. The value of that structure was revealed this week, as he chose to take physical settlement on a portion of the deal following a declining stock price, writes Nick Jacob.

Instead of what bankers estimated would have been a double-digit discount on a block trade from a seller recognised for canny market timing, Fredriksen achieved a smaller deal but managed to sell at what has worked out to be just a 7.6% discount in a falling market.

The stock ...

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