BY Fraser Tennant
In a restructuring transaction that eliminates over $4.6bn of its debt, technology, engineering and construction solutions provider McDermott International has filed for Chapter 11 bankruptcy protection.
The Chapter 11 restructuring process will be financed by a debtor-in-possession (DIP) financing facility of $2.81bn. Subject to court approval, McDermott expects the DIP financing, combined with cash generated by McDermott, to enable it to stabilise its cash flows, continue operating in the normal course and fulfil its commitments to key stakeholders, including customers, suppliers, joint-venture partners, business partners and employees.
The Chapter 11 process has the support of more than two-thirds of all McDermott’s funded debt creditors, including the company’s unsecured bondholders.
“The restructuring transaction is further recognition of McDermott's fundamentally solid operating business and proven strategy," said David Dickson, president and chief executive of McDermott. “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.”
McDermott expects all of its businesses to continue to operate as normal for the duration of the restructuring. The company also expects to continue to pay employee wages and health and welfare benefits, and to pay all suppliers in full. All customer projects are expected to continue uninterrupted on a global basis.
"This financial restructuring will create a sustainable capital structure that matches the strength of our operating business, continued Mr Dickson. “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.”
Operating in over 54 countries, McDermott's locally focused and globally integrated resources include more than 42,000 employees, a diversified fleet of speciality marine construction vessels and fabrication facilities around the world.
Mr Dickson concluded: “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.”
News: McDermott to file for Chapter 11 bankruptcy protection