McDermott has announced a financial restructuring transaction that will eliminate over £3.5 billion of debt. Furthermore, it will equitize nearly all funded debt, it said in a statement.
The company said it will emerge with a committed letter of credit financing and only £382 million of funded debt. The move has been supported by more than two-thirds of all funded debt creditors, it said in a statement.
The restructuring transaction will be implemented through a pre-packaged Chapter 11 process that will be financed by a debtor-in-possession (DIP) financing facility of £2.15 billion.
Subject to court approval, McDermott expects the DIP financing, combined with cash generated by McDermott, “to enable the company to stabilise its cash flows, continue operating in the normal course and fulfil its commitments to key stakeholders, including customers, suppliers, joint-venture partners, business partners and employees”.
The company has secured committed exit financing of over £1.84 billion, including letter of credit facility capacity and will emerge from Chapter 11 with approximately £382 million in funded debt. “The restructuring transaction will strengthen the company’s balance sheet, normalise its trade debt and it for long-term growth”, it said.
All of McDermott’s businesses are expected to continue to operate as normal for the duration of the restructuring. McDermott expects to continue to pay employee wages and health and welfare benefits, and to pay all suppliers in full. All customer projects are expected to continue uninterrupted on a global basis.
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