AmericasFinance and InsuranceOffshore

McDermott files for Chapter 11

Houston-based offshore engineering giant McDermott International has filed for Chapter 11 bankruptcy protection as part of a restructuring transaction that has the support of more than two-thirds of its funded debt creditors.

The restructuring transaction, which will eliminate over $4.6bn of debt, will be implemented through a prepackaged Chapter 11 process that will be financed by a debtor-in-possession financing facility of $2.81bn.

McDermott says the financing, combined with cash generated by McDermott, will enable the company to stabilise its cash flow, continue operating in the normal course and fulfil its commitments to customers, suppliers, joint-venture partners, business partners and employees.

The company also has secured committed exit financing of over $2.4 bn, and will emerge from Chapter 11 with around $500m in funded debt.

All of McDermott’s businesses are expected to continue to operate as normal throughout the restructuring.

As part of the restructuring transaction, subsidiaries of McDermott have entered into a share and asset purchase agreement with a joint partnership between The Chatterjee Group and Rhône Group to which the two companies will serve as the “stalking-horse bidder” in a court-supervised sale process for Lummus Technology. The partnership has agreed to acquire Lummus Technology, which has been for sale since September 2019, for a base purchase price of $2.725bn.

“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, president and CEO of McDermott.

“This financial restructuring will create a sustainable capital structure that matches the strength of our operating business. As a result of the transaction, we are eliminating over $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. I would like to thank our customers, employees, suppliers and partners for their ongoing dedication, and our lenders for their continued collaboration in reaching this comprehensive and definitive balance sheet solution. McDermott will emerge a stronger, more competitive company with a solid financial foundation, and we will build upon our reputation as a premier, fully integrated provider of technology, engineering and construction solutions to the energy industry,” Dickson added.

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Grant Rowles

Grant spent nine years at Informa Group based in London, Sydney, Hong Kong and Singapore. He gained strong management experience in publishing, conferences and awards schemes in the shipping and legal areas, working on a number of titles including Lloyd's List. In 2009 Grant joined Seatrade responsible for the commercial development of Seatrade’s Asia products. In 2012, with Sam Chambers, he co-founded Asia Shipping Media.
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