US's McDermott inks agreement for $1.7bn in additional financing
Contracting firm to receive immediate access to $550m under a term loan and $100m under a letter of credit
American engineering and contracting giant McDermott has announced an agreement with its secured lenders for access to $1.7bn (AED6.2bn) in additional financing, which will see the firm receive immediate access to $650m (AED2.37bn), which includes $550m (AED2bn) under a term loan facility and $100m (AED368m) under a letter of credit facility before reduction for related transaction fees and expenses.
McDermott’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.
The company expects to utilise the amounts available under the agreement to finance working capital and support the issuance of required performance guarantees on new projects.
Meanwhile, McDermott will continue to pursue the strategic alternatives process for Lummus Technology and the sale process for the remaining portion of the pipe fabrication business, but has decided to terminate the sale process for its industrial storage tank business.
Commenting on the new financing agreement, president and chief executive officer of McDermott, David Dickson, said: "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.”
Dickson added: “"The Agreement provides near-term liquidity for the Company to manage working capital and provide performance guarantees on expected new awards. We remain focused on serving our customers' needs, supporting our dedicated employees and maintaining our valued relationships with our subcontractors, suppliers and other business counterparties, all as part of our efforts to enhance our position as a premier, fully integrated provider of technology, engineering, and construction solutions to the energy industry."
Kirkland & Ellis is serving as legal counsel to McDermott in connection with the additional financing and related matters; Evercore is serving as financial adviso; AP Services, an affiliate of AlixPartners, is serving as operational advisor; and Barclays is acting as lead arranger on the financing.