McDermott International to File Under Chapter 11 of Bankruptcy Law

Engineering company McDermott International said it would file under Chapter 11 of the bankruptcy laws in an effort to eliminate more than $4.6 billion of debt via an equity swap.
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Oil, gas and engineering company McDermott International  (MDR) - Get Report said it would file under Chapter 11 of federal bankruptcy law.

The Houston company said that more than two-thirds of its creditors support a plan to eliminate more than $4.6 billion of debt by swapping the debt for equity. The company expects to exit Chapter 11 with about $500 million of funded debt.

The prepackaged restructuring plan reflects the debt McDermott took on when it acquired Chicago Bridge & Iron in 2018.

McDermott said it would file the plan on Tuesday in U.S. Bankruptcy Court for the Southern District of Texas.

McDermott also said on Tuesday that it agreed to sell its Lummus Technology unit for at least $2.75 billion to a joint partnership of Chatterjee Group and Rhone Group.

The company says that it expected the Chapter 11 process to be financed through a debtor-in-possession facility of $2.81 billion, subject to court approval.

That facility, along with the cash the company generates through operations, will enable it to fulfill its commitments to its shareholders, suppliers and business partners.

The company says that all its customer projects and operations will continue unimpeded by the restructuring. The company will continue to pay employee wages and health and welfare benefits, and all suppliers will be paid in full during its restructuring.

“Our record backlog, the majority of which has been booked in the last two years, and high rate of new project awards demonstrates our customers' continued confidence in our business, the demand for our skills and our long-term opportunities ahead,” CEO David Dickson said in a statement.

McDermott shares closed Friday down 3.2% at 70 cents.