McDermott and CB&I part ways as storage business starts its ‘exciting’ standalone game

U.S. offshore engineering and construction player McDermott has wrapped up the sale of its storage business to a consortium of financial investors, led by Mason Capital Management. This enables CB&I to begin its new journey as an independent company with no funded debt.

Following multiple bids from potential buyers, McDermott struck a deal to sell CB&I, which is engaged in the design and construction of storage facilities, tanks, and terminals. The divestment was expected to bring $475 million of proceeds before taxes and transaction expenses.

While confirming the completion of the sale of its storage business to a consortium of financial investors led by Mason Capital Management, the U.S. player underlined that the proceeds from the divestment would repay CB&I’s existing term loan, cash collateralize certain letters of credit, and reduce an existing term loan.

Michael McKelvy, President and Chief Executive Officer of McDermott, commented: “This transaction achieves a strategic goal set in motion last year and fully completes the separation of CB&I from McDermott. We will always have a shared history and know they will continue to lead the storage business under their new ownership.”

After CB&I became part of McDermott in 2018, when the two companies combined, McDermott completed actions in 2023 to strengthen the storage business, including providing a dedicated capital structure. While Goldman Sachs & Co. served as the exclusive financial advisor for the transaction to McDermott, Kirkland & Ellis acted as its legal counsel.

Mike Martino, Managing Member and Principal of Mason, noted: “Our mission is to empower CB&I to achieve its strategic goals, capitalize on new market opportunities, and leverage significant growth potential in the dynamic energy storage solutions sector. CB&I has built a legacy of innovation while setting industry standards in safety, reliability, and performance. We look forward to partnering with CB&I to help drive their vision forward.”

On the other hand, Citi acted as an exclusive Financial Advisor to Mason while Cadwalader, Wickersham & Taft served as legal counsel to Mason Capital Management. The closing of the transaction is said to position the former wholly owned unrestricted subsidiary of McDermott as an independent company with no funded debt.

Mark Butts, CEO of CB&I, remarked: “We are thrilled to partner with Mason and the consortium as we embark on an exciting new chapter as a standalone company. Together with our new partners, we will build upon CB&I’s rich 135+ year heritage, continuing to collaborate with our valued customers and suppliers to deliver innovative solutions that address the evolving infrastructure needs of energy and industrial markets.

“With the closing of this transaction, we are on solid financial footing, which positions us to capitalize on strong end-market demand and to advance our strategic goals.”

CB&I has achieved a new project milestone in partnership with Hanwha Ocean, as illustrated by a recently received approval in principle (AiP) for the design of a cargo containment system and an 80,000 cbm liquid hydrogen (LH2) carrier from DNV.

McDermott has expanded its contract backlog, with a front-end engineering design (FEED) assignment with Repsol for two oil fields that form part of a development project in the Gulf of Mexico.

The company also got another multimillion-dollar decommissioning job off the coast of Australia, described as the largest secured project of its kind.