June 12, 2019 / 3:26 PM / 2 months ago

Investor calls on Ensco Rowan to sell debt to fund $2.5 billion dividend

(Reuters) - Ensco Rowan Plc investor Luminus Management on Wednesday urged the deep-sea oil driller to sell guaranteed bonds to fund a special dividend of $2.5 billion, citing the stock’s “disappointing” performance despite a recent acquisition.

Shares of Ensco Rowan - formed after Ensco bought Rowan in April for $2.38 billion - fell more than 7% to their lowest in more than two decades, amid a broader drop in energy stocks as crude prices plunged about 2%.

“Extremely disappointed by the absolute and relative trading performance of Ensco Rowan both before, and since, consummation of the Ensco-Rowan merger,” Luminus said in a letter to Ensco Rowan’s board.

A commitment to pay out the dividend should lead to an immediate re-rating of the stock, according to Luminus, an investment advisor to funds that own 4.5% of Ensco Rowan.

Ensco Rowan’s shares have more than halved in value since the merger closed on April 11. They fell to a low of $7.02, giving the company a market value of about $1.40 billion.

Ensco Rowan, which last month scrapped its regular quarterly cash dividend, did not immediately respond to a request for comment.

Reporting by Arundhati Sarkar in Bengaluru; Editing by Shailesh Kuber and Sriraj Kalluivla

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