LNG

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, one of the leading US LNG and energy project contractors, has successfully completed its restructuring process several months after plunging into Chapter 11 bankruptcy status and later emerging with assets sales to raise cash and re-assure creditors.

McDermott International, the US LNG and energy engineering company overhauling its finances after Chapter 11 bankruptcy protection proceedings, said it was moving forward with the previously agreed sale of its Lummus Technology business.

McDermott said it had received no higher bids for Lummus and would now execute the previously announced share and asset purchase agreement to sell all of Lummus to a joint partnership between The Chatterjee Group, the New York-based investment fund, and Rhône Capital, a global private equity firm with offices in London and New York.

“McDermott did not receive a higher or better bid during the solicitation period, and the auction previously scheduled for Monday, March 9, 2020, will not occur,” explained the Houston-based company .

Subsidiaries of McDermott had entered into an agreement in January 2020 to sell Lummus to The Chatterjee Group and Rhône Capital for a base purchase price of $2.72 billion, subject to higher or otherwise better bids received through the court-supervised auction process. 

Under the terms of the agreement, 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 said the sale hearing to confirm the sale of Lummus Technology to the joint partnership will take place on Thursday, March 12, 2020, at 9:00 am.

The equity-for-debt plan agreed with the court would eliminate more than $4.6Bln of McDermott’s debt.

The restructuring transaction has been implemented through a pre-packaged Chapter 11 process, which under US law gives protection from bankruptcy.

It is being financed by a debtor-in-possession (DIP) financing facility of $2.81 billion. 

“Proceeds from the sale of Lummus Technology are expected to repay McDermott's DIP financing in full, as well as fund emergence costs and provide cash to the balance sheet for long-term liquidity,” said the company.

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

Currently McDermott is working with other firms on both the Cameron LNG project at Hackberry in Louisiana and the Freeport export facility at Quintana Island in Texas.

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

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

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

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