McDermott Announces Completion of Amendment to Extend Senior Secured Credit Agreement
May 16 2016 - 8:30AM
McDermott International, Inc. (NYSE:MDR) today announced that it
has satisfied all conditions to the amendment to the Company’s
Senior Secured Credit Agreement (“Amendment No. 3”) which in part
extends the maturity date of the letter of credit facility under
the Senior Secured Credit Agreement to April 22, 2019 (or January
15, 2019 if the term loan remains outstanding or is not refinanced
by that date).
Amendment No. 3 provides $450 million of letter of credit
capacity with the potential to increase to $600 million under an
accordion feature. The Amendment also provides flexibility by
increasing the baskets for purchase money indebtedness,
acquisitions and purchases of junior priority debt and extending
the window to mortgage the DLV 2000 by one year to allow the
Company to consider potential financing options.
In April, McDermott announced that other provisions of Amendment
No. 3 had become effective, including an amendment to replace the
existing minimum EBITDA requirement with a covenant package
comprised of two leverage ratios and a fixed charge ratio and
removed or reduced certain reporting requirements to the Credit
Agreement lenders.
Stuart Spence, McDermott Executive Vice President and Chief
Financial Officer, said, “We are pleased with the outcome of this
amendment process. We expect the extension of our letter of credit
facility to 2019, increased basket capacity, and an extended window
to mortgage the DLV 2000, along with our amended financial
covenants, to provide maximum flexibility and letter of credit
support to position us for continued steady bidding
activity.”
In connection with obtaining term lender consents to Amendment
No. 3, the Company prepaid $75 million of the term loan and entered
into Amendment No. 4 to the Company’s Senior Secured Credit
Agreement. Amendment No. 4 increased the applicable margin on the
term loan by 300 basis points per annum and requires the Company to
apply the proceeds from any financing of the DLV 2000 to repay the
term loan. “We believe the overall package associated with term
lender consents is favorable given the current energy capital
market conditions and provides a benefit through reduction in
leverage,” Spence said.
The prepayment will decrease 2016 Ending Cash and corresponding
Gross Debt by approximately $75 million. The change in interest
rate will increase 2016 Net Interest Expense and Cash Interest by
approximately $2 million.
About McDermott McDermott is a leading provider of
integrated engineering, procurement, construction and installation
(EPCI) services for upstream field developments worldwide. The
Company delivers fixed and floating production facilities,
pipelines and subsea systems from concept to commissioning for
complex Offshore and Subsea oil and gas projects to help oil
companies safely produce and transport hydrocarbons. Our customers
include national and major energy companies. Operating in more than
20 countries across the world, our locally focused and globally
integrated resources include approximately 11,200 employees, a
diversified fleet of specialty marine construction vessels,
fabrication facilities and engineering offices. We are renowned for
our extensive knowledge and experience, technological advancements,
performance records, superior safety and commitment to deliver.
McDermott has served the energy industry since 1923 and is listed
on the New York Stock Exchange. As used in this press
release, McDermott includes McDermott International, Inc. and its
subsidiaries and affiliates. To learn more, please visit our
website at www.mcdermott.com.
Forward-Looking StatementIn accordance with the
Safe Harbor provisions of the Private Securities Litigation Reform
Act of 1995, McDermott cautions that statements in this press
release which are forward looking, and provide other than
historical information, involve risks, contingencies and
uncertainties that may impact McDermott's actual results of
operations. These forward-looking statements include, among
other things, statements about the potential increase in the letter
of credit facility, increased flexibility, potential financing
options and continued strong bidding activity. Although we believe
that the expectations reflected in those forward-looking statements
are reasonable, we can give no assurance that those expectations
will prove to have been correct. Those statements are made by
using various underlying assumptions and are subject to numerous
risks, contingencies and uncertainties, including, among others
risks relating to: the global demand for oil and gas and the
fundamentals of the oil and gas industry, including the volatility
of oil and gas prices; expectations regarding offshore development
of oil and gas reserves; the volatility and uncertainty of
credit markets; other general economic and business conditions and
industry trends; our inability to successfully execute on contracts
in backlog; changes in project design or schedules; the
availability of qualified personnel; changes in the terms, scope or
timing of contracts; contract cancellations, change orders and
other modifications and actions by our customers and business
partners; difficulties executing on projects; and changes in
industry norms. If one or more of these risks materialize, or
if underlying assumptions prove incorrect, actual results may vary
materially from those expected. For a more complete discussion of
these and other risk factors, please see McDermott's annual and
quarterly filings with the Securities and Exchange Commission,
including its annual report on Form 10-K for the year ended
December 31, 2015. This press release reflects management's views
as of the date hereof. Except to the extent required by
applicable law, McDermott undertakes no obligation to update or
revise any forward-looking statement.
McDermott International, Inc.
Investor Relations
Kathy Murray
Vice President, Investor Relations
+1 281.870.5147
kamurray@mcdermott.com
Media Relations
Rick Goins
Director, Global Communications
+1 281.870.5932
rgoins@mcdermott.com
McDermott (NYSE:MDR)
Historical Stock Chart
From Mar 2024 to Apr 2024
McDermott (NYSE:MDR)
Historical Stock Chart
From Apr 2023 to Apr 2024