How to handle Transocean (RIG) merger

David Sacks on

Hi,

I need some assistance accounting for the merger of
Transocean (RIG) with GlobalSantaFe. Under the terms, for
each share of RIG we received $33.03 in cash and .6996
shares of the "bigger" RIG. In our case, we originally held
25 shares. AccountSync imported a "sale" of 25 shares with
proceeeds of $825.75 but we need to account for the 17
shares we now hold. To make matters a little more
complicated, we have not yet received proceeds for the
fractional shares that are owed us (since Scottrade) does
not hold fractional shares.

Since we originally held 25 shares and now hold 17, I was
thinking that maybe I should delete the transaction that was
automatically imported and just enter a sale of 8 (25 less
17) shares. Is that correct?

Thanks!!!

Rip West on

David,

Since we originally held 25 shares and now hold 17, I was
thinking that maybe I should delete the transaction that was
automatically imported and just enter a sale of 8 (25 less
17) shares. Is that correct?
>>

It could be, but there are some people who think the cash payment of $33.03 per share should be treated as a return of capital, followed by a reverse split to get your shares down to 25. I am researching this, and hope to have an answer by the end of the day.

Rip West
Saint Paul, MN

Rob Nagler on

David Sacks writes:
> I need some assistance accounting for the merger of
> Transocean (RIG) with GlobalSantaFe. Under the terms, for
> each share of RIG we received $33.03 in cash and .6996
> shares of the "bigger" RIG. In our case, we originally held
> 25 shares. AccountSync imported a "sale" of 25 shares with
> proceeeds of $825.75 but we need to account for the 17
> shares we now hold. To make matters a little more
> complicated, we have not yet received proceeds for the
> fractional shares that are owed us (since Scottrade) does
> not hold fractional shares.

I don't think this relates to Scottrade. Companies don't issue
partial shares. The brokers that let you by fractional shares are
being "nice" to you by buying the share, and letting you own part of
it.

What you receive is cash-in-lieu from the company.

> Since we originally held 25 shares and now hold 17, I was
> thinking that maybe I should delete the transaction that was
> automatically imported and just enter a sale of 8 (25 less
> 17) shares. Is that correct?

I'm not sure why AccountSync would have entered the sale. I suspect
it was misreported on Scottrade. AccountSync normally handles
mergers automatically.

We'll get this fixed up for you. Sit tight. :-)

Cheers,
Rob

Rip West on

The conversion of each share of Transocean [RIG] is not a merger. It is a reclassification of the RIG shares prior to the merger with GlobalSantaFe. The reclassification calls for converting each RIG share into cash of $33.03 and .6996 shares of new RIG shares.

You should delete all the entries made for you by AccountSync for this transaction. Then you should sell 7.51 RIG shares [.3004 x 25] for $825.75. If you had purchased your RIG shares in more than one block, you would have to sell .3004 of each block.

This will leave you with some fractional shares. You should wait until your broker gives you cash for these fractional shares, and then enter that amount as a sale of the fractional shares of RIG.

Shareholders of GlobalSantaFe will have to make entries for the cash and RIG shares exchanged for their shares. This is a complicated merger for stock plus cash transaction. For those interested, there should be an article on how to handle both these transactions [the reclassification and the merger] up on the IClub website in a couple of days.

Rip West
Saint Paul, MN

Frank Kilsdonk on

So our club has entries in the section that originally
reflected the result of the merger sale, but now that
transaction shows a sale of share, but no cash in the bivio
account, yet Schwab indicates we have received cash. Is
account sync going to reflect this transaction properly
soon, or is it up to the treansurers to attempt to 'make it
right. ?
thanks in advance in the rather interesting transaction
Frank

Rip West wrote:
> The conversion of each share of Transocean [RIG] is not a
> merger. It is a reclassification of the RIG shares prior to the merger with
> GlobalSantaFe. The reclassification calls for converting each RIG share into
> cash of $33.03 and .6996 shares of new RIG shares.
>  
> You should delete all the entries made for you by
> AccountSync for this transaction. Then you should sell 7.51 RIG shares [.3004 x
> 25] for $825.75. If you had purchased  your RIG shares in more than one
> block, you would have to sell .3004 of each block.
>  
> This will leave you with some fractional shares. You
> should wait until your broker gives you cash for these fractional shares, and
> then enter that amount as a sale of the fractional shares of RIG.
>  
> Shareholders of GlobalSantaFe will have to make entries
> for the cash and RIG shares exchanged for their shares. This is a complicated
> merger for stock plus cash transaction. For those interested, there should be an
> article on how to handle both these transactions [the reclassification and the
> merger] up on the IClub website in a couple of days.
>
> Rip West
> Saint Paul,
> MN

Rip West on

Hi Frank,

Well, my advice still stands. I would go ahead and record the transaction in accordance with my previous instructions, and then delete any entries made by AccountSync.

Rip West
Saint Paul, MN

Eric Dobbs on

Frank Kilsdonk wrote:
> Is
> account sync going to reflect this transaction properly
> soon, or is it up to the treansurers to attempt to 'make it
> right. ?

It's in our queue to get this merger fixed. When we've got
it fixed we'll almost certainly be following Rip's
guidelines anyway. But it may be a week or so before we've
got it all cleaned up. If you and your club can wait a
little while, we'll get it cleaned up for you. If you need
your books in order sooner, then as Rip suggested, delete
the AccountSync transactions and enter them by hand
according to Rip's instructions.

Eric Dobbs
bivio Inc.

Paul Moeller on

Frank Kilsdonk wrote:
> So our club has entries in the section that originally
> reflected the result of the merger sale, but now that
> transaction shows a sale of share, but no cash in the bivio
> account, yet Schwab indicates we have received cash.

Schwab botched the data provided to AccountSync and did not include
the cash portion of the reclassification. You can edit the sale
transaction and enter the actual amount you received for the merger.

Paul Moeller
bivio, Inc.

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