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    Noble to spin-off Paragon Offshore as dividend

    Offshore drilling contractor Noble Corp. (NYSE: NE) has updated its spin-off plans and no longer intends to IPO shares of its standard specification spin-off of Paragon Offshore. The company expects to effect the spin-off as a dividend of 100% of the shares of Paragon Offshore to Noble's shareholders during the third quarter of this year.

    The company had originally planned to IPO up to 20% of the standard-spec company before spinning off the remainder later this year, noted analysts at Cowen and Company, who view the move positively.

    “We expect the spin-off to come in the form of a one-to-one issuance of private shares in the new standard specification asset company. While NE shares have traded off 1.5% this morning, we feel that this clear timeline for the spin-off of Paragon Offshore should be seen as a positive. Shareholders now have certainty that the two companies will be divided before year end and the manner in which the separation will occur. We believe that uncertainty surrounding the spin-off has dragged shares lower in recent months,” the analysts said in a note to investors Wednesday.

    As previously announced, Paragon Offshore will own and operate most of Noble's current standard specification drilling business, including five drillships, three semisubmersibles, 34 jackups, and one FPSO.  The new company will also be responsible for the Hibernia platform operations.  Noble will continue to own and operate its high-specification assets with particular operating focus in deepwater and ultra-deepwater market segments for drillships and semisubmersibles and harsh environment and high-specification segments for jackups.

    "In light of financial market conditions, both generally and with respect to the equity markets for offshore drilling companies, we decided to eliminate the initial public offering and accelerate the completion of the separation transaction,” David W. Williams, chairman, president and CEO of Noble said in a prepared statement.

    The spin-off, which is expected to be tax-free to shareholders, will be subject to approval by Noble's shareholders at the upcoming annual general meeting.  Noble will also file a registration statement on Form 10, and the distribution will be subject to such registration statement being declared effective, as well as final board approval of the actual dividend and other customary matters. 

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