McDermott gets fresh capital injection to fund growth

U.S. offshore engineering and construction services provider McDermott has secured approximately $560 million in new capital through a series of transactions expected to close by the end of the year.

McDermott said on Wednesday it has secured commitments from certain existing lenders and shareholders for these transactions, as well as approval from a steering committee comprised of certain existing letter of credit and term loan lenders.

The transactions are designed to further strengthen the company’s balance sheet, increase liquidity, and fund future growth opportunities, McDermott explained.

“The support of the Investors and the Steering Committee reflects their confidence in our long-term business strategy and competitive position”, said David Dickson, President and Chief Executive Officer of McDermott.

Earlier this year, McDermott completed its restructuring process by shedding nearly all of the company’s $4.6 billion of funded debt.

The company emerged from bankruptcy at the end of June 2020 with $2.4 billion in the letter of credit capacity and $544 million of funded debt.

This was done through the $2.7 billion sale of Lummus technology to a joint partnership between Haldia Petrochemicals and Rhône Capital.

The proceeds from the sale served to repay the debtor-in-possession financing in full, as well as fund emergence costs and provide cash to the balance sheet for long-term liquidity.

Dickson added: “Following on the heels of a successful restructuring earlier this year, this additional capital will further solidify our liquidity position, enabling us to continue to deliver superior project execution for our customers and consistently pursue new growth opportunities as demand for our expertise and capabilities increases”.

McDermott has received a commitment from the investors with respect to a new letter of credit facility that will replace its existing cash-secured letter of credit facility, permitting the release of cash collateral of approximately $390 million.

Additionally, McDermott will raise $170 million in gross proceeds from the issuance of common shares to certain of its existing shareholders that have been backstopped by the investors. The transactions are expected to close by year-end.