McDermott International Inc. said Oct. 21 it has entered into an agreement with certain of its secured lenders under which the company will have access to up to $1.7 billion of additional financing, including letter of credit capacity.
Under the terms of the agreement, McDermott will have immediate access to $650 million of financing comprised of $550 million under a term loan facility and $100 million under a letter of credit facility, before reduction for related transaction fees and expenses.
The company expects to utilize the amounts available under the agreement to finance working capital and support the issuance of required performance guarantees on new projects.
“This new credit agreement is a continued signal from our lenders that they support McDermott, our underlying business, growth strategy and ability to achieve a long-term balance sheet solution,” David Dickson, president and CEO of McDermott, said. “The agreement provides near-term liquidity for the company to manage working capital and provide performance guarantees on expected new awards."
McDermott continues to pursue the previously announced strategic alternatives process for Lummus Technology and the sale process for the remaining portion of the pipe fabrication business. McDermott has decided to terminate its previously announced sale process for its industrial storage tank business.
The company’s ability to access the remaining amount of financing under the agreement is subject to various conditions that are at the discretion of the Lenders. Those conditions are detailed in the Form 8-K that the company filed with the U.S. Securities and Exchange Commission today.
McDermott also announced that it is withdrawing its previously stated guidance for full-year 2019. Separately, the presentation material used by the company in discussions with the lenders regarding the new financing is included as an exhibit to the Form 8-K.
Kirkland & Ellis LLP is serving as legal counsel to McDermott in connection with the new financing and related matters, Evercore is serving as financial adviser and AP Services LLC, an affiliate of AlixPartners, is serving as operational adviser. Barclays is acting as lead arranger on the financing.
Civil engineer Jose Agusto replaces Carlos Perez, who resigned last week for personal reasons.
Success in those projects would result in its reserve base reaching 3.7 billion barrels over the next seven years and help Woodside expand production by 6% a year over the next decade, the company said.
Output at the largest formation, the Permian Basin of Texas and New Mexico, is expected to rise 57,000 bbl/d to 4.73 MMbbl/d.