McDermott closes $1 billion revolver, $1.39 billion LoC facility

By Marisa Wong

Morgantown, W.Va., May 11 – McDermott International, Inc. entered into a credit agreement on May 10 for a $1 billion senior secured revolving credit facility and a $1.39 billion senior secured letter-of-credit facility, according to an 8-K filing with the Securities and Exchange Commission.

The credit agreement also includes a previously announced $2.26 billion seven-year senior secured term loan.

Barclays Bank plc, Credit Agricole CIB, Goldman Sachs Bank USA, ABN Amro Capital USA LLC, MUFG Bank, Ltd. and Royal Bank of Canada are the joint lead arrangers and joint lead bookrunners, with Standard Chartered Bank as co-manager and Barclays Bank and Credit Agricole as co-syndication agents. Credit Agricole is also the revolving and LoC administrative agent.

The revolver and LoC facility are set to mature on May 10, 2023.

Revolving loans will bear interest at Libor plus a margin ranging from 375 basis points to 425 bps, depending on the company’s leverage ratio. The margin is initially 425 bps.

The borrowers will be charged a commitment fee of 50 bps on the daily amount of the unused portions of the commitments under the revolver and the LoC facility.

Additionally, with respect to all letters of credit outstanding, there is a 25-bps fronting fee and a participation fee of 375 bps to 425 bps for financial letters of credit and 187.5 bps to 212.5 bps for performance letters of credit, in each case depending on McDermott’s leverage ratio.

The credit agreement includes the following financial covenants: a minimum permitted fixed-charge coverage ratio of 1.50 to 1.00; a maximum permitted leverage ratio of 4.25 to 1.00 for each fiscal quarter ending on or before Sept. 30, 2019, 4.00 to 1.00 for the quarter ending Dec. 31, 2019, 3.75 to 1.00 for each quarter ending after Dec. 31, 2019 and on or before Dec. 31, 2020, 3.50 to 1.00 for each quarter ending after Dec. 31, 2020 and on or before Dec. 31, 2021 and 3.25 to 1.00 for each quarter ending after Dec. 31, 2021; and minimum liquidity of $200 million.

At closing, there were $60 million of letters of credit issued under the revolver and $1.3 billion of letters of credit under the LoC facility.

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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