McDermott restructures debt and files Chapter 11 bankruptcy
McDermott has finalised a pre-packaged restructuring of its estimated $9.86bn in debt, and will file for Chapter 11 bankruptcy protection.
The restructuring will be financed by a debtor-in-possession (DIP) financing facility of $2.81bn. McDermott will also sell Lummus Technology for $2.73bn. It said the restructuring would eliminate $4.6bn debt.
The company also has secured committed exit financing of over $2.4bn in letter of credit facility capacity and will emerge from Chapter 11 with approximately $500mn in funded debt.
McDermott wrote that business is expected to continue as usual during the restructuring, and it will continue to pay wage, benefits, and pay all of its suppliers in full.
"As a result of the transaction, we are eliminating over $4.6bn in debt from our balance sheet and we will emerge with robust liquidity and significant financing to execute on customer projects in our backlog," wrote McDermott CEO David Dickson. "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 [...] 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."
As a result of the upcoming Chapter 11 filing, McDermott expects to be delisted from the New York Stock Exchange within the next 10 days. McDermott common stock will continue to trade in the over-the-counter marketplace throughout the pendency of the Chapter 11 process. The shares are proposed to be cancelled as part of McDermott's restructuring.
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