Company: RIG
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0001451505-25-000018
Chunk: 38

Company: Transocean Ltd.
Filing Date: 2025-02-18
Form: 10-K
Item: Item 7A
Chunk 38
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 from the issuance of the 8.25% Senior Notes and the 8.50% Senior Notes and (e) an increase of $130 million resulting from the issuance of the 8.00% Senior Notes as partial consideration to acquire the outstanding ownership interests of Orion.  See Notes to Consolidated Financial Statements—Note 8—Debt and Notes to Consolidated Financial Statements—Note 19—Risk Concentration.

The majority of our cash equivalents is subject to variable interest rates or short-term interest rates and such cash equivalents earn commensurately higher rates of return when interest rates increase.

Equity price risk—We are exposed to equity price risk primarily related to the bifurcated compound exchange feature contained within the indenture governing the 4.625% Senior Guaranteed Exchangeable Bonds.  The market price of our shares is the primary driver of the fair value of the exchange feature.  At December 31, 2024, the fair value of the bifurcated compound exchange feature was $136 million.  At December 31, 2024, a 10 percent hypothetical increase or decrease to the market price of our shares would result in a $22 million increase or $18 million decrease, respectively, to the carrying amount of the exchange feature, recorded as a component of our debt, and a corresponding adjustment to interest expense.  See Notes to Consolidated Financial Statements—Note 8—Debt and Notes to Consolidated Financial Statements—Note 19—Risk Concentration.

Currency exchange rate risk—We are exposed to currency exchange rate risk primarily related to contract drilling revenues, employee compensation costs and purchasing costs that are denominated in currencies other than our functional currency, the U.S. dollar.  We use a variety of techniques to minimize the exposure to currency exchange rate risk, including structuring customer payment terms and occasionally entering into forward exchange contracts.  We structure customer contracts, as our primary tool to manage currency exchange rate risk, to provide for payment in both U.S. dollars and local currency where the local currency portion is based on our anticipated local currency requirements over the contract term.  Due to various factors, including customer acceptance, local banking laws, national content requirements, other statutory requirements, currency liquidity, local inflation and revenue efficiency, actual local currency needs may vary from those realized in the customer contracts, resulting in partial exposure to currency exchange rate risk.  The currency exchange effect resulting from our international