HOUSTON, Jan. 21, 2020 /PRNewswire/ -- McDermott
International, Inc. (NYSE: MDR) ("McDermott") today announced that
it has the support of more than two-thirds of all its funded debt
creditors for a restructuring transaction that will equitize nearly
all the Company's funded debt, eliminating over $4.6 billion of debt.
The restructuring transaction will be implemented through a
prepackaged Chapter 11 process that will be financed by a
debtor-in-possession ("DIP") financing facility of $2.81 billion. Subject to court approval,
McDermott expects the DIP financing, combined with cash generated
by McDermott, to enable the Company to stabilize its cash flows,
continue operating in the normal course and fulfill its commitments
to key stakeholders, including customers, suppliers, joint-venture
partners, business partners and employees.
The Company also has secured committed exit financing of over
$2.4 billion in letter of credit
facility capacity and will emerge from Chapter 11 with
approximately $500 million in funded
debt. The restructuring transaction will strengthen the Company's
balance sheet, normalize its trade debt and position the Company
for long-term growth.
All of McDermott's businesses are expected to continue to
operate as normal for the duration of the restructuring. McDermott
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 morning, the Company commenced solicitation of votes from
its lenders and bondholders in support of a prepackaged Chapter 11
Plan of Reorganization ("the Plan"). The Company intends to
commence the prepackaged Chapter 11 filing in the U.S. Bankruptcy
Court for the Southern District of Texas ("the Court") later today. The Company's
support from all of its creditor constituencies is memorialized in
a Restructuring Support Agreement. The Company plans to move
swiftly toward Court approval of the Plan, with confirmation
expected within approximately two months from filing.
As part of the restructuring transaction, subsidiaries of
McDermott have entered into a share and asset purchase agreement
(the "Agreement") with a joint partnership between The Chatterjee
Group and Rhône Group (the "Joint Partnership") pursuant to which
the Joint Partnership will serve as the "stalking-horse bidder" in
a court-supervised sale process for Lummus Technology.
Under the terms of the Agreement, the Joint Partnership has
agreed, and is committed, to acquire Lummus Technology for a base
purchase price of $2.725 billion.
McDermott will have the option to retain or purchase, as
applicable, a 10 percent common equity ownership interest in the
entity purchasing Lummus Technology. McDermott expects to hold an
auction in approximately 45 days to solicit higher or better bids
for the Lummus Technology business. Either the Joint Partnership or
the winning bidder at the auction will purchase Lummus Technology
as part of the Chapter 11 process, subject to regulatory and court
approval.
Proceeds from the sale of Lummus Technology are expected to
repay the DIP financing in full, as well as fund emergence costs
and provide cash to the balance sheet for long-term liquidity.
"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 Chief Executive Officer 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."
Mr. Dickson continued, "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."
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.
Upon the Chapter 11 filing, more information about McDermott's
restructuring, including access to Court documents, will be
available at https://cases.primeclerk.com/McDermott or contact
Prime Clerk, the Company's noticing and claims agent, at
877-426-7705 (for toll-free domestic calls) and 917-994-8380 (for
tolled international calls), or email
McDermottInfo@primeclerk.com.
Kirkland & Ellis LLP is serving as legal counsel to
McDermott, Evercore Group L.L.C. is serving as the Company's
financial advisor and AP Services, LLC, an affiliate of
AlixPartners, is serving as operational advisor. Jackson Walker L.L.P. is serving as local legal
counsel, Baker Botts L.L.P. is serving as corporate legal counsel,
Arias, Fabrega & Fabrega is serving as Panamanian legal counsel
and Prime Clerk is serving as administrative agent.
Davis Polk & Wardwell LLP is
serving as legal counsel to the Term Loan Lenders, Centerview
Partners LLC is serving as financial advisor to the Term Loan
Lenders, Barclays is serving as agent to the Term Loan Lenders and
Latham & Watkins LLP is serving as legal counsel to the agent
to the Term Loan Lenders.
Linklaters LLP is serving as legal counsel to the Revolving
Lenders, Crédit Agricole Corporate and Investment Bank is serving
as agent to the Revolving Lenders, Bracewell LLP is serving as
legal counsel to the agent to the Revolving Lenders and FTI
Consulting is serving as financial advisor to the agent to the
Revolving Lenders.
Paul, Weiss, Rifkind, Wharton & Garrison LLP and Brown
Rudnick LLP are serving as legal counsel to the bondholders.
Houlihan Lokey, Inc. is serving as
financial advisor to the bondholders.
About McDermott
McDermott is a premier, fully
integrated provider of technology, engineering and construction
solutions to the energy industry. For more than a century,
customers have trusted McDermott to design and build end-to-end
infrastructure and technology solutions to transport and transform
oil and gas into the products the world needs today. Our
proprietary technologies, integrated expertise and comprehensive
solutions deliver certainty, innovation and added value to energy
projects around the world. Customers rely on McDermott to deliver
certainty to the most complex projects, from concept to
commissioning. It is called the "One McDermott Way." Operating in
over 54 countries, McDermott's locally focused and globally
integrated resources include more than 42,000 employees, a
diversified fleet of specialty marine construction vessels and
fabrication facilities around the world. To learn more, visit
www.mcdermott.com.
Forward-Looking Statements
In accordance with the Safe
Harbor provisions of the Private Securities Litigation Reform Act
of 1995, McDermott cautions that statements in this communication
which are forward-looking, and provide other than historical
information, involve risks, contingencies and uncertainties. These
forward-looking statements include, among other things, statements
about improving McDermott's capital structure, McDermott's ability
to effect its restructuring as expected, or at all, the inability
of McDermott to execute on contracts in backlog successfully,
intended use of proceeds from a transaction involving a sale of all
or part of the Lummus Technology business and strengthening of
McDermott's balance sheet. Although we believe that the
expectations reflected in those forward-looking statements are
reasonable, we can give no assurance that those expectations will
prove to have been correct. Those statements are made by using
various underlying assumptions and are subject to numerous risks,
contingencies and uncertainties, including, among others:
negotiations with third parties; regulatory and other approvals;
adverse changes in the markets in which McDermott operates or
credit or capital markets; and actions by lenders, other creditors,
customers and other business counterparties of McDermott. If one or
more of these risks materialize, or if underlying assumptions prove
incorrect, actual results may vary materially from those expected.
You should not place undue reliance on forward-looking statements.
For a more complete discussion of these and other risk factors,
please see each of McDermott's annual and quarterly filings with
the U.S. Securities and Exchange Commission, including McDermott's
annual report on Form 10-K for the year ended December 31, 2018 and subsequent quarterly
reports on Form 10-Q. This communication reflects the views of
McDermott's management as of the date hereof. Except to the extent
required by applicable law, McDermott undertakes no obligation to
update or revise any forward-looking statement.
Contacts:
Investor Relations
Scott
Lamb
Vice President, Investor Relations
+1 832 513 1068
Scott.Lamb@McDermott.com
Global Media Relations
Gentry Brann
Senior Vice President, Communications, Marketing and
Administration
+1 646 805 2849
Media@McDermott.com
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SOURCE McDermott International, Inc.
