McDermott International will file for Chapter 11 bankruptcy for a restructuring transaction that will equitize nearly all the company's funded debt, eliminating over $4.6 billion of debt.
In a released statement, the company said that 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. McDermott 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.
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.
As part of the restructuring plan, McDermott has agreed to sell Lummus Technology to The Chatterjee Group and Rhône Group for $2.725 billion. However, the deal must be approved by a bankruptcy judge in an auction process that could go to a higher bidder.
With more than 32,000 employees in 54 nations, the McDermott posted a $1.9 billion loss on $2.1 billion of revenue in the third quarter of 2019.
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's 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 canceled as part of McDermott's restructuring.
