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Tuesday, July 3, 2018

Succession &/@ Ocean Rig

The new HBO series Succession captures moments in the life of a wealthy family confronting the reality its patriarch will at some point step away from his job.  In last week's episode, I Went to Market, the family comes together to celebrate Thanksgiving, consuming enough alcohol for some family members to share their honest opinions of others.  Some leave early.  It may not be the worst of their experiences together, but it is a situation among those referred to in contemporary slang as a dumpster fire.

A theme of Succession has been that the father, who heads the publicly traded media conglomerate that employs some of the children, has managed to keep things under control for years.  When the father (Logan Roy, played brilliantly by Brian Cox), is temporarily not at the helm of the company (Waystar Royco), it turns out that the family's stock in the company secures a loan that the lender can call if the stock drops below a certain price.  This creates a multi-billion dollar problem in the father's absence because speculation over the fate of the company could cause a drop in the stock price.  To explain how this is dealt with could be a spoiler, so let's just say a person willing to handle the situation is later advised: "You are a f*cking idiot."  (This is a very harsh statement that may prove to be true.  Stay tuned.)

Watching the show's second episode, Sh*t Show at the F**k Factory was thought provoking for me as an attorney who works on financial restructurings.  At first the title seemed remarkably vulgar but as the episode progressed and in the weeks after it aired I have come to appreciate its title may cover, albeit indelicately, a lot of corporate situations that likewise appear to be stable when there is a mess really, just beneath the surface...

A few months after entering into a court process in the Cayman Islands that led to appointment of provisional liquidators, Ocean Rig's Chief Executive Officer (CEO) George Economou and his nephew Anthony Kandylidis, Ocean Rig's Chief Financial Officer (CFO) left these roles with publicly traded Ocean Rig (Nasdaq ticker symbol ORIG).  In the lead up to and following the announcement of their succession at the end of December 2017, Ocean Rig is not what it used to be.  This is so even taking into account that the past few years have been tough for some in the offshore oil drilling industry the company services with its drillship and rig rental business.  Late last year Reuters reported that its sources advised Ocean Rig was "preparing to explore a sale amid pressure from some of its largest shareholders to review its strategic alternatives."  At the time of this writing, most of the company's rigs are not under contract.  The former CEO and CFO are defendants in a shareholder class action alleging improprieties with respect to DryShips (Nasdaq ticker symbol DRYS), another publicly traded company they helped run together.  There is also Ocean Rig related litigation pending in the United States and in the Marshall Islands, prosecuted by investors in the company, including the author of this post.

Now - would the situation be any better without the succession of the uncle/nephew team who helmed Ocean Rig as chief executive and financial officers?  We will never know.  For its part, HBO's Succession remains unpredictable.  Episode 6, Which Side Are You On? is due to air this coming Sunday, the 8th of July.  With the Roy family's Thanksgiving being as intense as it was, let's hope it's not Christmas for them just yet!

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