McDermott International Inc. said it has reached an agreement with more than two-thirds of its lenders in a restructuring transaction that would eliminate more than $4.6 billion in debt.
As part of the chapter 11 bankruptcy agreements, lenders have agreed to a $2.81 billion debtor-in-possession loan to keep the engineering company’s operations running during bankruptcy.
The financing, subject to court approval, could enable the company to stabilize its cash flows, McDermott said.
As part of the restructuring, the company said Tuesday it would sell Lummus Technology, which licenses gas-processing, refining, petrochemical and coal-gasification technologies, to a joint partnership between the Chatterjee Group and Rhône Group for $2.73 billion.
The company said it would have the option to retain or buy a 10% equity ownership interest in the joint partnership. McDermott said it expects to hold an auction in about 45 days to solicit superior bids for the Lummus business.
The company will emerge from the chapter 11 process with about $500 million in funded debt, it said. McDermott said it has secured committed exit financing of more than $2.4 billion in letter of credit facility capacity.
The Houston-based engineering and construction company has struggled this year after it reported losses on some big liquefied natural gas construction projects.
McDermott said it expects to operate as normal, continue to pay employee wages and benefits and pay suppliers in full amid the restructuring.
“We will emerge with robust liquidity and significant financing to execute on customer projects in our backlog,” McDermott President and Chief Executive David Dickson said.
With its coming chapter 11 filing, McDermott said it could be delisted from the New York Stock Exchange within the next 10 days. Its stock would continue to trade in the over-the-counter marketplace through the chapter 11 process, the company said.
Write to Dave Sebastian at dave.sebastian@wsj.com
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2020-01-21 13:59:00Z
https://www.wsj.com/articles/mcdermott-international-reaches-agreement-with-lenders-11579615139
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