McDermott reorganization plan confirmed, $2.73 billion sale approved

By Caroline Salls

Pittsburgh, March 12 – McDermott International, Inc. announced Thursday that the U.S. Bankruptcy Court for the Southern District of Texas confirmed its plan of reorganization and approved the sale of Lummus Technology to a joint partnership between the Chatterjee Group and Rhone Capital.

“With the support of our creditors, employees, customers and suppliers, we have been able to confirm our plan of reorganization less than two months after we initially filed for Chapter 11,” McDermott president and chief executive officer David Dickson said in a news release.

“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.”

Under the terms of the plan, McDermott will complete a comprehensive restructuring transaction to de-lever its balance sheet and immediately position the company for long-term growth. The transaction will allow the company to emerge with more cash on hand than debt, eliminating more than $4.6 billion of debt.

The company said it expects to emerge in the second quarter following the receipt of regulatory approval for the sale of Lummus Technology to the joint partnership.

As previously reported, subsidiaries of McDermott entered into a share and asset purchase to sell Lummus Technology to the joint partnership as stalking horse bidder for a base purchase price of $2.725 billion.

Proceeds from the sale of Lummus Technology are expected to repay McDermott’s debtor-in-possession financing in full, as well as fund emergence costs and provide cash to the balance sheet for long-term liquidity.

Under the plan, holders of DIP new-money term loans will be paid in full, in cash from sale proceeds or exit financing.

Holders of DIP letter-of-credit claims will participate in a super senior exit facility.

Holders of DIP cash secured letters of credit will participate in a cash secured exit facility.

Holders of Barclays Sidecar, 2023 letter-of-credit facility, revolving credit facility and Lloyd’s facility claims will participate in a roll-off letter-of-credit exit facility or receive a share of a secured creditor funded debt distribution.

Holders of term loan facility and credit agreement hedging claims will receive a share of a secured creditor funded debt distribution.

Holders of senior notes claims will receive a share of 6% of the new equity interests in the reorganized company, plus additional shares as a result of a pre-bankruptcy funded secured claims excess cash adjustment, subject to dilution on account of new warrants and a management incentive plan. These creditors will also receive a share of new warrants.

General unsecured claims will be reinstated or holders will be paid in full in cash.

Existing equity interests will be cancelled, released and extinguished without any distribution.

McDermott is a Houston-based provider of technology, engineering and construction solutions to the energy industry. The company filed bankruptcy on Jan. 21 under Chapter 11 case number 20-30336.

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