- Energy contractor McDermott International yesterday announced it has successfully completed its restructuring process. U.S. Bankruptcy Judge David Jones signed an order releasing the Houston-based engineering and construction firm from Chapter 11 reorganization.
- The comprehensive balance sheet restructuring eliminates nearly all of McDermott's $4.6 billion of funded debt and allows the company to emerge with $2.4 billion credit capacity and $544 million of funded debt.
- In March, Jones approved the reorganization plan that also includes the sale of the company's Lummus Technology group to a joint partnership between Haldia Petrochemicals and Rhône Capital. Proceeds from the sale will 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.
Under the reorganization, which had the support of two-thirds of the firm's creditors, the company's suppliers are to be paid in full and operations have continued “in normal course,” according to McDermott. There were between 50,000 and 100,000 creditors owed money by McDermott and its dozens of subsidiaries around the world, according to The Advocate newspaper. The largest is Kansas City, Missouri-based UMB Bank at $1.4 billion and dozens of contractors and subcontractors are each owed millions.
The proposal drew objections from some shareholders earlier this year, who have argued that it is unfair and imbalanced toward McDermott management, officers and directors. The shareholders, whose interests will be wiped out under the proposed plan, have argued that the proposal provides McDermott’s management with 7.5% of newly issued equity in the restructured company, while leaving the equity shareholders with nothing.
In addition to the shareholder filing, the SEC lodged a limited objection to the Chapter 11 plan, due to provisions that would release various third parties from liability, including current and former McDermott officers, directors, principals, employees and current and former equity holders. The company's stock was delisted from the NYSE on Feb. 6.
McDermott also announced a newly constituted board of directors consisting of:
- David Dickson, McDermott president and CEO.
- Nils Larsen, a senior operating adviser working with The Carlyle Group's U.S. Equity Opportunities Fund.
- Craig Broderick, a senior director of Goldman Sachs.
- Barbara Duganier, a board member for MRC Global, Noble Energy and West Monroe Partners and formerly a board member of Buckeye Partners, L.P. and HCC Insurance Holdings.
- Alan Hirshberg, a director at Falcon Minerals Corp. He served as executive vice president, Production, Drilling & Projects at ConocoPhillips until he retired in 2019.
- Lee McIntire, a senior advisor and board member at TerraPower, where he served as CEO from August 2015 to October 2018. He was a partner and executive vice president and served on the Board of Directors of Bechtel Corp. from 1989 to 2004.
- Paul Soldatos, a board member and senior advisor in the industrial, service and consumer/retail sectors.
"We will continue executing on our significant backlog, with a new capital structure to match and support the strength of our operating business, and we emerge well-positioned for long-term growth and success, even amid this period of global uncertainty," Dickson said in a press statement.