US oilfield services firm files for bankruptcy; plans to sell petrochem unit

McDermott International filed for Chapter 11 bankruptcy on Jan. 23, 2020, after the US-based engineering and construction firm reached an agreement with creditors to tackle its debt.

The firm has the support of two-thirds of the holders of its funded debt in a pact that will eliminate more than $4.6 billion of debt by swapping it for equity, according to a company statement.

The company said that the exit financing – money provided to debtors to allow the firm to continue operating – will amount to $2.4 billion.

Following Chapter 11 bankruptcy proceedings, McDermott will have an estimated $500 million in funded, long-term debt.

McDermott’s petrochemicals subsidiary, Lummus Technology, will be sold to a joint partnership between 2 New York headquartered companies, Chatterjee Group and Rhône Group.

All of McDermott's businesses are expected to continue to operate as normal for the duration of the restructuring, the statement said.

“The company expects to continue to pay employee wages and health and welfare benefits, and to pay all suppliers in full. All customer projects are expected to continue uninterrupted on a global basis,” it said.

McDermott was currently working on a host of oil and gas projects in Saudi Arabia including contracts from Aramco worth more than $4.5 billion for the Marjan Increment Program.