Houston-based McDermott International Ltd. is making moves to secure $560 million in new liquidity to fund growth moving forward.

The company has reached an agreement to adjust its debt with a new letter of credit that will free up $390 million in cash that was previously unusable because McDermott had to hold it as collateral, according to a company press release. On top of that, McDermott is selling more common shares to some of its exiting investors, raising gross proceeds of about $170 million, the company said.

“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,” said CEO David Dickson.

Both of the liquidity-raising transactions are expected to close before the end of the year. They have support from a group of investors and a steering committee comprising certain lenders, the company said in the press release. Dickson said in the press release that the support of those groups is indicative of their confidence in McDermott’s strategy.

This liquidity expansion activity comes on the heels of McDermott’s exit from Houston’s bankruptcy court in June. The in-court restructuring process cut away $4.6 billion of debt, leaving it at the time with $2.4 billion in letter of credit capacity and $544 million of funded debt. In exchange, McDermott turned ownership of the company over to creditors and cancelled the interests of its previous ownership, including common shareholders. The moves took McDermott off of the NYSE, where it had previously been traded as a public company.

Kirkland & Ellis LLP is serving as legal counsel to McDermott. AP Services, LLC, an affiliate of AlixPartners, is serving as operational advisor and Centerview Partners is serving as the company’s financial advisor.

By Joshua Mann – Senior Reporter

Courtesy of The Houston Business Journal

https://www.bizjournals.com/houston/news/2020/11/20/mcdermott-secures-funds-for-growth.html

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