Jan 21 | 2020
(Global) US$4.6 Billion of Debt
Multinational engineering group McDermott has announced a comprehensive pre-packaged restructuring transaction, designed to eliminate more than US$4.6 billion of debt.
The offshore engineering specialist has faced tensed discussions over the last two months to stave off creditors and avoid bankruptcy. The proposed restructuring transaction will be implemented through a pre-packaged Chapter 11 process and financed by a debtor-in-possession, or DIP, financing facility of US$2.81 billion.
"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 David Dickson, CEO of McDermott.
Lummus Sale
The Chapter 11 proceedings will see McDermott enter into a share and asset purchase agreement for a court-supervised sale process for its Lummus Technology division. A joint partnership between The Chatterjee Group and Rhône Group will serve as the "stalking-horse bidder," having agreed a base purchase price of US$2.725 billion.
“McDermott expects to hold an auction in approximately 45 days to solicit higher or better bids for the Lummus Technology business,” the firm said in a statement.
One of the world’s largest oil and gas contractors, the firm has faced difficult financial conditions in recent years as uncertainty in the global oil sector has impacted long-term investment and eaten into McDermott’s revenues.
Delisting from NYSE
The upcoming Chapter 11 filing will result in McDermott delisting its shares from the New York Stock Exchange within the next 10 days, while common stock will continue to trade in the over-the-counter marketplace throughout the pendency of the Chapter 11 process.
“As a result of the transaction, we are eliminating over US$4.6 billion in debt from our balance sheet, and we will emerge with robust liquidity and significant financing to execute on customer projects in our backlog. Throughout this process, which we expect to complete expeditiously, McDermott will continue all business operations as normal and deliver on our commitments to our customers,” Dickson added.
In 2018, McDermottt acquired Dutch engineering, procurement and construction company Chicago Bridge & Iron for a record US$6 billion. The move was a gamble to form a global giant and would create a single company offering “end-to-end solutions,” but weak market demand has since failed to support profitability.
The offshore engineering specialist has faced tensed discussions over the last two months to stave off creditors and avoid bankruptcy. The proposed restructuring transaction will be implemented through a pre-packaged Chapter 11 process and financed by a debtor-in-possession, or DIP, financing facility of US$2.81 billion.
"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 David Dickson, CEO of McDermott.
Lummus Sale
The Chapter 11 proceedings will see McDermott enter into a share and asset purchase agreement for a court-supervised sale process for its Lummus Technology division. A joint partnership between The Chatterjee Group and Rhône Group will serve as the "stalking-horse bidder," having agreed a base purchase price of US$2.725 billion.
“McDermott expects to hold an auction in approximately 45 days to solicit higher or better bids for the Lummus Technology business,” the firm said in a statement.
One of the world’s largest oil and gas contractors, the firm has faced difficult financial conditions in recent years as uncertainty in the global oil sector has impacted long-term investment and eaten into McDermott’s revenues.
Delisting from NYSE
The upcoming Chapter 11 filing will result in McDermott delisting its shares from the New York Stock Exchange within the next 10 days, while common stock will continue to trade in the over-the-counter marketplace throughout the pendency of the Chapter 11 process.
“As a result of the transaction, we are eliminating over US$4.6 billion in debt from our balance sheet, and we will emerge with robust liquidity and significant financing to execute on customer projects in our backlog. Throughout this process, which we expect to complete expeditiously, McDermott will continue all business operations as normal and deliver on our commitments to our customers,” Dickson added.
In 2018, McDermottt acquired Dutch engineering, procurement and construction company Chicago Bridge & Iron for a record US$6 billion. The move was a gamble to form a global giant and would create a single company offering “end-to-end solutions,” but weak market demand has since failed to support profitability.
