) -- Shares of


(RIG) - Get Report

fell sharply Tuesday after the Swiss offshore driller announced a dilutive stock offering.

Before the opening bell, Transocean said it's selling 26 million newly issued shares, in part to help refinance its acquisition of

Aker Drilling

, which was completed in early October. The company currently has roughly 320 million common shares so the issuance represents about 8% of its outstanding stock.

The news sent Transocean shares down more than 9% to close at $41.63, and the session low of $41.28 is the stock's worst intraday level since June 2010 when it ran as low as $41.88. Tuesday's volume of 23.1 million was more than three times the issue's trailing three-month daily average of 6.3 million.

The issuance of the new stock has some analysts wondering if Transocean will be able to keep its dividend payout intact. The company's forward annual dividend is $3.16 a share, giving it a yield of 7.6% at current levels.

"Though RIG will pay its remaining installments of the currently planned dividend of $1 billion, it is unlikely that the company will renew the dividend at its current level, in our view," Bank of America Merrill Lynch said in a research note on Tuesday.

Wells Fargo estimated the quarterly dividend could be cut down to between 20-to-40 cents a share vs. the current payout of 79 cents a share.

A Transocean spokesman asked about the dividend said the company doesn't comment on "market speculation."


Written by Alexandra Zendrian in New York


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Alexandra Zendrian

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