McDermott International increases term loan B size to $2.26 billion

By Sara Rosenberg

New York, March 28 – McDermott International Inc. upsized its seven-year first-lien term loan to $2.26 billion from a revised amount of $2.06 billion and an initial size of $2.15 billion, according to a market source.

Also, the free and clear was removed from the incremental allowance, the source said.

Pricing on the term loan is Libor plus 500 basis points with a 1% Libor floor and an original issue discount of 99.

The loan has 101 soft call protection for one year and a ticking fee of half the margin from days 31 to 60 and the full margin thereafter.

Earlier in syndication, pricing on the term loan was increased from talk in the range of Libor plus 400 bps to 425 bps, the discount widened from 99.5, the call protection was extended from six months, a maximum total leverage covenant of 4.25 times with step-downs was added to the originally covenant-light term loan, a springing maturity was added to six months inside of the six-year notes with stipulations, and the excess flow sweep was increased to 75% with step-downs from 50% with step-downs.

Also previously in syndication, changes were made to asset sale mandatory prepayments, movement of IP assets to non-loan parties, interest period, restricted payments, capital expenditure limitation and financial statements.

Barclays, Credit Agricole, Goldman Sachs Bank USA, MUFG, ABN Amro, RBC Capital Markets and Standard Chartered are the lead arrangers on the deal. Barclays is the administrative agent.

Final commitments were scheduled to be due at 5 p.m. ET on Wednesday, the source added.

Proceeds will be used to refinance existing debt, to cash collateralize letters of credit and to pay related fees and expenses.

The company is also issuing $1.3 billion in notes, downsized from $1.5 billion with the term loan upsizing.

Pro forma first-lien net leverage is 0.8 times, and total net leverage is 1.8 times.

McDermott is a Houston-based provider of integrated engineering, procurement, construction and installation, front-end engineering and design and module fabrication services for upstream field developments.

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