McDermott International will file for Chapter 11 bankruptcy Tuesday, the struggling Houston oilfield service company confirmed.
In a statement released early Tuesday morning, McDermott said it would will file a prepackaged restructuring plan at the U.S. Bankruptcy Court in Houston. The plan, which has the support of two-thirds of its creditors, would allow McDermott will receive more than $2.8 billion in financing and shed $4.6 billion of debt.
As part of the restructuring plan, McDermott has agreed to sell Lummus Technology to The Chatterjee Group and Rhône Group for $2.725 billion. However, the deal must be approved by a bankruptcy judge in an auction process that could go to a higher bidder.
McDermott’s announcement ends four months of speculation that the company would file for bankruptcy. Market rumors about the company using the services of a restructuring advisory firm sent McDermott’s stock price plummeting in September.
Shares of McDermott were trading $6 per share range in September but have plunged below $1 a share. The company received a delisting warning from the New York Stock Exchange to bring shares back above $1 per share threshold.
Founded in 1923, McDermott provides design, engineering and construction services to petrochemical plants, liquefied natural gas plants and offshore oil and natural gas facilities.
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With more than 32,000 employees in 54 nations, the Houston company posted a $1.9 billion loss on $2.1 billion of revenue in the third quarter.
Most of those losses are attributed to a joint venture with costly delays in completing construction contracts for the Cameron LNG export terminal in Louisiana and the Freeport LNG export terminal in Texas. Other losses are attributed to a $6 billion deal last year to buy rival engineering, procurement and construction company Chicago Bridge & Iron.
