McDermott International Ltd announced that it has entered into a transaction support agreement, with more than 75 percent, in the aggregate, of its secured letter of credit providers, funded debt lenders and equity holders, to begin a financial restructuring process .
The move is being made to strengthen McDermott’s capital structure, improve its liquidity position and “further position the company for long-term success,” McDermott said in a statement released on your website.
Additionally, McDermott disclosed in the statement that it has received $250 million in new capital from a group of its existing shareholders, which it said will support its ability to operate its business, deliver existing projects and expand the portfolio with new client projects. .
Under the terms of the agreement, McDermott will amend and extend its term loans and LC facilities for three years, through mid-2027 without changes in pricing, increase the company’s liquidity and discharge certain liabilities legacy laws, McDermott noted in the statement. CB&I Storage Solutions will have dedicated working capital and a standalone LC facility separate from McDermott LC facilities, the company noted.
To implement the deal, McDermott International Holdings BV and Lealand Finance Company BV will initiate proceedings in the Netherlands under the Dutch Out-of-court Plans Confirmation Act, McDermott said. CB&I UK Limited will initiate a restructuring plan under Part 26A of the Companies Act 2006 (UK) in England, it added.
McDermott International Holdings BV, Lealand Finance Company BV and CB&I UK Limited are the only McDermott entities named in these proceedings, the company said in the statement. After the conclusion of the proceedings in the Netherlands and the United Kingdom, McDermott said he will make a voluntary submission in the US to ensure legal recognition of the decisions of international courts.
McDermott noted in the statement that it expects to continue all current supplier agreements, projects and commitments with customers during these processes. The company noted that it currently expects to complete the processes by early 2024 at the latest.
“Over the past 24 months, our executive leadership has made transformative progress in resetting and implementing our business strategy by leveraging the strength of our operating business and aligning our approach to our core customers,” said Michael McKelvy, chairman and CEO of McDermott. in a company statement.
“We are pleased to have reached this agreement with our key stakeholders, which demonstrates their confidence in the strength and long-term sustainability of our business,” he added.
“These proactive steps ensure that McDermott is well positioned to deliver on our growing number of client projects as we continue our important work to accelerate the energy transition in our industry,” he continued.
“We intend to continue all operations as normal as we move through these processes, including the continued delivery of our customers’ projects, and I thank our customers, suppliers and partners for their patience and unwavering support. As we celebrate our 100th anniversary, we look forward to a long future as one of the few companies in the world with the reach, assets, capabilities and know-how to meet growing global customer demand for low-carbon and energy transition solutions McKelvy said.
McDermott has already won several contracts this year, with a large number coming in July.
Earlier this month, the company disclosed that it had been awarded a project management consultancy and engineering, procurement and construction management contract for the Polypropylene Naphtha Cracker Expansion (Phase II) and the new project d ‘ethylene derivatives unit of Indian Oil Corporation Limited.
Also in July, McDermott announced that it had secured a “significant” contract from Qatargas Operating Company Limited to provide engineering, procurement, construction and installation for the gas pipeline project and submarine cables for the sustainability of the field’s production north, COMP1.
In the same month, McDermott revealed that Woodside Energy had been awarded an engineering, procurement and removal contract for offshore decommissioning work and an offshore transport and installation contract from Sarawak Shell Berhad for the fields F22, F27 and Selasih. uplift project off the coast of Sarawak, East Malaysia.
Restructuring process 2020
In June 2020, McDermott International Ltd announced that the company had successfully completed a restructuring process.
“The comprehensive balance sheet restructuring recapitalizes nearly all of McDermott’s $4.6 billion in funded debt,” McDermott said in a statement posted on its site at the time.
“The company emerges with $2.4 billion in letter of credit capacity and $544 million in funded debt,” he added.
In the statement, McDermott announced that it had completed the sale of Lummus Technology to a joint venture between Haldia Petrochemicals Ltd., a flagship company of The Chatterjee Group, and Rhône Capital, “after receiving all necessary regulatory approvals and “in accordance with the company’s reorganization plan”.
“The proceeds from the sale of Lummus Technology will fully repay the debtor-in-possession financing, as well as fund emergency costs and provide cash on the balance sheet for long-term liquidity,” the company noted at the time. .
“We are delighted to have completed this process so quickly thanks to the dedication of our employees and the support of our new owners, customers, suppliers and partners,” David Dickson, McDermott’s chairman and CEO at the time, said in a statement. company June 2020 statement.
“We will continue to execute on our significant backlog of work, with a new capital structure to match and support the strength of our operating business, and leave well-positioned for long-term growth and success, even amid this period of global uncertainty,” he said. added
“We look forward to continuing to deliver on client projects. Finally, we congratulate our colleagues at Lummus and look forward to continuing our working partnership with Lummus as we move into the future,” he continued.
In March 2020, McDermott announced that the United States Bankruptcy Court for the Southern District of Texas upheld the company’s reorganization plan and approved the sale of Lummus Technology to a joint venture between The Chatterjee Group and Rhône Capital.
“With the support of our creditors, employees, customers and suppliers, we were able to confirm our reorganization plan less than two months after we initially filed for Chapter 11,” Dickson said in a company statement at the time.
“This is a significant achievement and allows us to emerge in the near term as a stronger, more competitive player with a sustainable capital structure that matches the strength of our operating business,” he added.
In its March 2020 statement, McDermott said that under the terms of the plan, it would complete a “comprehensive restructuring transaction to deleverage its balance sheet and immediately position the company for long-term growth.”
In January 2020, McDermott announced that it had the support of more than two-thirds of all of its funded debt creditors for a restructuring transaction that it said would recapitalize nearly all of the company’s funded debt.
“The restructuring transaction will be implemented through a prepackaged Chapter 11 process that will be funded by a $2.81 billion debtor-in-possession financing facility,” the company said at the time.
“Subject to court approval, McDermott expects that the DIP financing, combined with the cash generated by McDermott, will enable the company to stabilize its cash flows, continue to operate in the normal course and meet its commitments to key stakeholders, including customers, suppliers, venture partners, business partners and employees,” he added.
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