Published: January 23, 2020 |

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McDermott International said that it will seek bankruptcy protection in the US in an effort to cut down its debt of more than $4.6 billion.

The oilfield equipment and services provider had plunged into heavy debt following its $6 billion worth all-stock merger with Chicago Bridge & Iron Company (CB&I) in 2018, reported Reuters.

The company has now announced a restructuring transaction aimed at equitizing almost all its funded debt.

Backed by more than two-thirds of all its funded debt creditors, the restructuring transaction will be carried out via a prepackaged Chapter 11 process. The transaction will be funded by a debtor-in-possession (DIP) financing facility of $2.81 billion, said the oilfield services provider.

McDermott said that it has been given an exit financing commitment of more than $2.4 billion in letter of credit facility capacity. The oilfield services company expects to come out of Chapter 11 with nearly $500 million funded debt.

The company believes that the restructuring transaction will bolster its balance sheet, normalize its trade debt, while positioning it for long-term growth.

Operations at all its businesses are not expected be impacted during the duration of the financial restructuring. Likewise, the company expects to continue to execute all its customer projects across different parts of the world without any interruption.

As part of the ongoing development in the group, McDermott’s subsidiaries signed a share and asset purchase agreement with a joint partnership between The Chatterjee Group and Rhône Group. Under the agreement, the joint partnership will be the stalking-horse bidder in a court-supervised sale process for Lummus Technology, the company’s downstream technology business.

The joint partnership has agreed to acquire Lummus Technology for a base purchase price of $2.725 billion. However, an auction will be held for the sale of the downstream technology business to solicit higher or better bids, said the oilfield services provider.

McDermott has the option to retain or buy, as applicable, a 10 percent stake in the entity that will buy Lummus Technology.

“The restructuring transaction, which has the full support from all of our funded creditors, including our unsecured bondholders, is further recognition of McDermott’s fundamentally solid operating business and proven strategy,” said McDermott President and CEO David Dickson.

“Our record backlog, the majority of which has been booked in the last two years, and high rate of new project awards demonstrates our customers’ continued confidence in our business, the demand for our skills and our long-term opportunities ahead,” added Dickson.

Source: NS Energy

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