McDermott Faces Bankruptcy Filing

EPC's Talks with Lenders Unresolved

Shares in multinational engineering group McDermott have plummeted on news the firm is negotiating with lenders in advance of filing bankruptcy.
The offshore engineering specialist is one of the world’s largest oil and gas contractors, and is seeking a loan of US$2 billion or more to stave off creditors.

The firm is reported to be discussing potential terms with lenders including Baupost Group and HPS Investment Partners. All parties declined to comment on the negotiations.

Difficult Financial Conditions

Headquartered in Texas, McDermott is one of the largest integrated onshore-offshore engineering, procurement and construction company, or EPC, has operations in more than 54 countries and a workforce of about 32,000 employees.
The firm has faced difficult financial conditions in recent years as uncertainty in the global oil sector has impacted long-term investment and eaten into McDermott’s revenues.
The firm operates six global product line teams, covering offshore and subsea, downstream, liquefied natural gas, power, industrial storage, and pipe fabrication.

CB&I Gamble

In 2018, McDermottt acquired Dutch EPC Chicago Bridge & Iron for a record US$6 billion. The move was a gamble to form a global giant and would create “a single company that can offer end-to-end solutions” but weak market demand has since failed to support profitability."

McDermott stocks have been on the slide since September, when it was announced it had hired advisers to advise on a turnaround. The EPC reached agreement with some creditors to secure part of a US$1.7 billion financing package and forbearance agreement, which is due to expire Jan. 15. The company also sought to sell off it's Lummus Technology business.