LNG

McDermott International, the US energy and liquefied natural gas project engineering company, has reached support agreements with more than 75 percent of secured letter of credit facility providers, funded debt creditors and equity holders stemming from its several years of debt woes.

Jan 12 (LNGJ) - The US liquefied natural gas LNG storage business CB&I has been contracted to design and build tanks for peak-shaving facilities in Bluff Creek and Ixonia in the southeast of the US state of Wisconsin. “Demand for natural gas fluctuates daily and seasonally,” said Cesar Canals, Senior Vice President of CB&I.

   “By storing LNG when demand is low, energy companies can ensure adequate supply when demand is at its peak - which are normally the coldest days of winter in Wisconsin,” added Canals whose company is a subsidiary of engineering firm McDermott. CB&I built the first LNG peak-shaving facility in North America in 1965 and which is still in operation.

The Philippines LNG project at Batangas Bay on the Filipino main island of Luzon has awarded construction and storage tank contracts to the world’s oldest tank erector, Chicago Bridge and Iron (CB&I).

McDermott International, the LNG and energy engineering company, has secured around $560 million in new capital through a series of transactions expected to close by the end of 2020, just a year after filing for Chapter 11 bankruptcy protection.

McDermott has secured commitments from certain existing lenders and shareholders for these transactions, as well as approval from a steering committee comprised of certain existing letter of credit and term loan lenders.

“The transactions are designed to further strengthen the company's balance sheet, increase liquidity and fund future growth opportunities,” said McDermott.

The Houston, Texas-based company said the support reflected their confidence in the long-term business strategy and competitive position.

Analysts noted that many companies in the US and global oil and gas sector have experienced difficulties in the past year, though McDermott's problems were essentially caused by an ill-timed take-over deal.

McDermott is involved in some of the world’s leading LNG construction projects, including on the US Gulf Coast and the North Field Expansion in Qatar and at Ichthys LNG in Australia.

McDermott has additionally been engaged as a contractor on the Golden Pass LNG export project for Qatar Petroleum and ExxonMobil.

“Following on the heels of a successful restructuring earlier this year, this additional capital will further solidify our liquidity position, enabling us to continue to deliver superior project execution for our customers and consistently pursue new growth opportunities as demand for our expertise and capabilities increases,” said
David Dickson, President and Chief Executive of McDermott.

Kirkland and Ellis LLP is serving as legal counsel to McDermott, AP Services, LLC, an affiliate of AlixPartners, is serving as operational advisor and Centerview Partners is serving as the company's financial advisor.

McDermott first received approval for a comprehensive restructuring plan in January 2020, supported by more than two-thirds of all its funded debt creditors.

The equity-for-debt plan eliminated more than $4.6 billion of McDermott’s debt.

The restructuring was implemented through a pre-packaged Chapter 11 process.

The process resulted in a comprehensive balance sheet restructuring and transformed into equity nearly all of McDermott's funded debt.

The company had suffered financial problems since it completed the $6Bln deal in 2018 to buy LNG rival engineering, procurement and construction company Chicago Bridge & Iron (CB&I).

The restructuring transaction managed to strengthen its balance sheet and normalize its trade debt.

All of McDermott's businesses operated as normal during the restructuring.

McDermott also completed the sale of Lummus Technology to a joint partnership between Haldia Petrochemicals, a flagship company of The Chatterjee Group, and equity fund Rhone Capital, having received all required regulatory approvals under the reorganization.

McDermott emerged from the crisis with a newly constituted board of directors.

McDermott International, the energy and LNG engineering company, reported progress on three US LNG export projects and with other orders pending as it also registered third-quarter losses of $1.9 billion in the midst of a corporate overhaul and asset sales.

McDermott International Inc., one of the main firms involved in the US Gulf Coast build-out of liquefaction and export plants, was the subject of speculation at the Gastech 2019 conference in Houston after its shares plunged more than 60 percent and trading was suspended.

McDermott International posted a more than 23 percent rise in second-quarter revenues to 2.1 billion and a small net loss as it continued to make progress on two US Gulf Coast LNG export projects, the Cameron liquefaction plant in Louisiana and Freeport facility in Texas.

The delayed US Cameron LNG export project led by Sempra Energy has been boosted by the long-awaited introduction of feed-gas to the first liquefaction Train by engineers McDermott and Chiyoda Corp. of Japan.

US energy and LNG engineering companies McDermott International and CB&I announced their global name and brands as a last-minute alternative bid for McDermott by a Norwegian rival, the Subsea 7 company, was rejected.

US energy and LNG engineering companies McDermott International and Chicago Bridge & Iron Company (CB&I) have agreed to merge in an all-stock transaction valued at $6 billion to create a larger onshore-offshore operation to target engineering, procurement and construction contracts.