McDermott International Inc. is getting ready to file for chapter as quickly as subsequent week to handle its greater than $four billion debt load, in accordance with individuals with information of the matter.
The Houston-based firm, which builds oil platforms and gas-export crops for power producers, is negotiating a restructuring plan that might see its debt transformed into fairness with present term-loan lenders getting the vast majority of the shares, mentioned the individuals. Unsecured collectors would obtain lower than 10% of the fairness together with warrants, one of many individuals mentioned.
The phrases of the restructuring are nonetheless being negotiated and will change, in accordance with the individuals, who requested to not be recognized as a result of the talks are non-public. Baupost Group and HPS Investment Partners might present a chapter mortgage of about $2 billion, the individuals mentioned.
Representatives for McDermott and HPS declined to remark. A consultant for Baupost didn’t instantly reply to requests for remark.
McDermott has been underneath vital strain since September, when its inventory and bonds plunged on information that it had employed turnaround advisers. The firm has struggled to combine its acquisition of Chicago Bridge & Iron Co. and clear a backlog of tasks, crimping earnings.
Late final yr the corporate secured a part of a $1.7 billion rescue financing bundle and entered right into a forbearance settlement with a few of its lenders, however that aid interval expired January 15th. Its credit score agreements have been amended in order that acceleration of its bonds wouldn’t represent a default by Jan. 21. On Friday, its 2024 bonds have been buying and selling round 9.5 cents on the greenback, in accordance with Trace bond-trading knowledge.
McDermott has additionally been making an attempt to shore up liquidity by a sale of its Lummus Technology enterprise. The firm beforehand mentioned it had acquired unsolicited bids to amass all or components of Lummus with a valuation exceeding $2.5 billion.
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