Major Restructuring Plan: Mc Dermott to Sell Lummus Technology

Technology Purchase Major Restructuring Plan: Mc Dermott to Sell Lummus Technology

22.01.2020Editor: Ahlam Rais

Amidst reports of Mc Dermott going bankrupt, the company has plans to sell its Lummus Technology. One of the bidders for the technology is the joint partnership between The Chatterjee Group and Rhône Group which is willing to purchase the technology for 2.725 billion dollars.

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Mc Dermott expects to hold an auction to solicit higher or better bids for the Lummus Technology business.
(Source: Deposit Photos)

Houston/USA – Mc Dermott International has recently announced that it has the support of more than two-thirds of all its funded debt creditors for a restructuring transaction that will equitise nearly all the Company's funded debt, eliminating over 4.6 billion dollars of debt.

The restructuring transaction will be implemented through a prepackaged Chapter 11 process that will be financed by a debtor-in-possession (DIP) financing facility of 2.81 billion dollars. Subject to court approval, Mc Dermott expects the DIP financing, combined with cash generated by Mc Dermott, to enable the Company to stabilise its cash flows, continue operating in the normal course and fulfill its commitments to key stakeholders, including customers, suppliers, joint-venture partners, business partners and employees.

As part of the restructuring transaction, subsidiaries of Mc Dermott have entered into a share and asset purchase agreement (the Agreement) with a joint partnership between The Chatterjee Group and Rhône Group (the Joint Partnership) pursuant to which the Joint Partnership will serve as the ‘stalking-horse bidder’ in a court-supervised sale process for Lummus Technology.

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Under the terms of the Agreement, the Joint Partnership has agreed, and is committed, to acquire Lummus Technology for a base purchase price of 2.725 billion dollars. Mc Dermott will have the option to retain or purchase, as applicable, a 10 per cent common equity ownership interest in the entity purchasing Lummus Technology. Mc Dermott expects to hold an auction in approximately 45 days to solicit higher or better bids for the Lummus Technology business. Either the Joint Partnership or the winning bidder at the auction will purchase Lummus Technology as part of the Chapter 11 process, subject to regulatory and court approval.

Proceeds from the sale of Lummus Technology are expected to repay the DIP financing in full, as well as fund emergence costs and provide cash to the balance sheet for long-term liquidity.

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