MDR McDermott International Inc

Restructuring Support Agreement

On January 21, 2020, McDermott International, Inc. (the “Company”) and certain of its subsidiaries (the “Filing Subsidiaries,” and together with the Company, the “Debtors”) entered into that certain Restructuring Support Agreement (together with all exhibits and schedules thereto, the “RSA”), by and among: (i) the Debtors; (ii) certain lenders (the “Consenting Barclays Lenders”) under the Debtors’ Letter of Credit Agreement, dated October 30, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the “Barclays Sidecar”), by and among the Company, McDermott Technology (Americas), Inc. (“MTA”), McDermott Technology (US), Inc. (“MTUS”) and McDermott Technology, B.V. (“MTBV”), the guarantors party thereto and Barclays Bank PLC (“Barclays”); (iii) certain lenders (the “Consenting 2023 LC Lenders”) under the Debtors’ letter of credit facility (the “2023 LC Facility”) under the Credit Agreement, dated May 10, 2018 (the “Credit Agreement”), by and among MTA, MTUS and MTBV, the Company, the guarantors party thereto, a syndicate of lenders and letter of credit issuers, Barclays and Crédit Agricole Corporate and Investment Bank (“CACIB”); (iv) certain lenders (the “Consenting Revolving Lenders”) under the revolving credit facility (the “Revolving Credit Facility”) under the Credit Agreement; (v) certain lenders (the “Consenting Term Lenders”) under the term loan facility (the “Term Loan Facility”) under the Credit Agreement; (vi) certain letter of credit issuers (the “Consenting Superpriority LC Lenders”) under the letter of credit facility under the Debtors’ Superpriority Senior Secured Credit Agreement, dated October 21, 2019 (the “Superpriority Credit Agreement”), with MTA, MTUS and MTBV, a syndicate of lenders and letter of credit issuers, Barclays and CACIB; (vii) certain lenders (the “Consenting Superpriority Term Lenders”) under the term loan facility under the Superpriority Credit Agreement; and (viii) certain holders (the “Consenting Noteholders” and, together with the Consenting Barclays Lenders, the Consenting 2023 LC Lenders, the Consenting Revolving Lenders, the Consenting Term Lenders, the Consenting Superpriority LC Lenders, the Consenting Superpriority Term Lenders and the Consenting Noteholders, the “Restructuring Support Parties”) of the Company’s 10.625% senior notes due 2024 (the “Senior Notes”) issued pursuant to that certain Indenture, dated April 18, 2018, by and among MTA, MTUS, the Company, the other guarantors party thereto, and UMB Bank, N.A. (as successor to Wells Fargo Bank, National Association), as trustee.

The RSA contains certain covenants on the part of the Debtors and the Restructuring Support Parties, including that the Restructuring Support Parties (i) vote in favor of the Joint Prepackaged Chapter 11 Plan of Reorganization of the Debtors (as proposed, the “Prepackaged Plan”) under chapter 11 of the United States Bankruptcy Code (“Chapter 11”) contemplated by the RSA, (ii) act in good faith and use reasonable best efforts to support and complete successfully the related solicitation of votes to obtain sufficient acceptances of the Prepackaged Plan (the “Solicitation”), and (iii) otherwise support and take all actions that are necessary and appropriate to facilitate approval of the disclosure statement related to the Solicitation (the “Disclosure Statement”), confirmation of the Prepackaged Plan and consummation of the Debtors’ restructuring in accordance with the RSA. The RSA further provides that the Restructuring Support Parties shall have the right, but not the obligation, to terminate the RSA upon the occurrence of certain events, including the failure of the Debtors to achieve certain milestones.

In addition to a $2.81 billion debtor-in-possession financing facility (the material terms of which are described in the DIP Term Sheet attached as Exhibit 2 to the Restructuring Term Sheet attached to the RSA), the RSA contemplates that, on the effective date of the Prepackaged Plan (the “Effective Date”), the Debtors will enter into new exit credit facilities (“Exit Facilities”), consisting of (i) a super senior exit facility comprised of a letter of credit facility in an amount of $743 million (the “Super Senior Exit

Facility”), (ii) a super senior term loan facility in an amount of any portion of the Make Whole Amount (as defined in the RSA) outstanding and not repaid at emergence (the “Make Whole Exit Facility”); (iii) a senior secured letter of credit exit facility in an amount up to $1.326 billion for new letters of credit (the “Senior LC Exit Facility”), (iv) a senior secured letter of credit exit facility reflecting existing letters of credit (the “Roll-Off LC Exit Facility” and, together with the Super Senior Exit Facility and the Senior LC Exit Facility, the “LC Exit Facilities”), (v) a senior secured term loan facility in an amount of $500 million of take-back debt (the “Term Loan Exit Facility”), and (vi) a cash secured letter of credit exit facility in an amount up to $371 million (the “Cash Secured LC Facility”). The aggregate amount of commitments under the LC Exit Facilities and the Cash Secured LC Exit Facility will be approximately $2.4 billion.

Additionally, in connection with the Sellers’ (as defined below) entry into the Purchase Agreement (as defined below) with a “stalking horse” bidder, it is anticipated that the Sellers will sell the Company’s Lummus Technology division (the “Technology Business”), subject to the approval of the Court (as defined below), and subject to an auction to solicit superior bids for the Technology Business to be conducted approximately 45 days after the commencement of the Chapter 11 cases, or on such date as otherwise ordered by the Court.

Proposed Joint Prepackaged Chapter 11 Plan of Reorganization

Pursuant to the RSA, the Company commenced the Solicitation on January 21, 2020. In connection with the commencement of the Solicitation, copies of the Disclosure Statement and the Prepackaged Plan were distributed to certain institutional investor and lender creditors of the Company entitled to vote on the Prepackaged Plan. The Prepackaged Plan, which remains subject to the approval of the United States Bankruptcy Court for the Southern District of Texas (the “Court”), provides that, among other things, on the Effective Date:

Share and Asset Purchase Agreement

On January 21, 2020, certain subsidiaries of the Company (collectively, the “Sellers”) entered into a share and asset purchase agreement (“Purchase Agreement”) with a buyer, Illuminate Buyer, LLC (the “Buyer”), pursuant to which the Buyer has agreed to purchase, subject to the terms and conditions contained therein, all of the equity interests in each of Lummus Technology LLC, McDermott Technology (2), B.V., and certain other affiliated entities and ventures, along with certain other assets which, collectively, constitute the “Technology Business.” Each of the Sellers is a debtor in the Chapter 11 cases.

The acquisition of the Technology Business pursuant to the Purchase Agreement is subject to approval of the Court and an auction to solicit higher or otherwise better bids. The Sellers will seek Court approval to declare the Buyer as the “stalking horse” bidder approximately 40 days after the commencement of the Chapter 11 cases. If the Debtors receive any bids that are higher or otherwise better, the Debtors expect to conduct an auction for the Technology Business approximately 45 days after the commencement of the Chapter 11 cases, or on such date as otherwise ordered by the Court. As the stalking horse bidder, the Buyer’s offer to purchase the Technology Business, as set forth in the Purchase Agreement, serves as the minimum or floor bid on which the Debtors, their creditors, suppliers, vendors, and other bidders may rely. Other interested bidders would be permitted to participate in the auction of the Technology Business if they submit qualifying offers that are higher or otherwise better than the stalking horse bid.

Under the terms of the Purchase Agreement, the Buyer has agreed, absent any higher or otherwise better bid, to acquire the Technology Business from the Sellers for $2.725 billion, subject to certain adjustments in accordance with the terms and conditions of the Purchase Agreement, plus the assumption of specified liabilities related to the Technology Business. Upon the execution of the Purchase Agreement, the Buyer is required to deposit into escrow an aggregate amount equal to $100 million, and is required to deposit in escrow an additional $100 million in the event the Buyer is the successful bidder at the auction (collectively, the “Deposit”), which Deposit will be credited to the purchase price on the completion of the acquisition of the Technology Business. If the Purchase Agreement is terminated, the Deposit will be returned to the Buyer unless the Buyer defaults under the Purchase Agreement, in which case the Deposit will be retained by the Sellers. If the Court approves the Purchase Agreement and the Sellers consummate an alternative sale of the Technology Business to any person other than the Buyer, the Sellers will pay to the Buyer a break-up fee equal to 3% of the purchase price and reimburse certain expenses associated with the negotiation, drafting, and execution of the Purchase Agreement.

The foregoing descriptions of the RSA and the Purchase Agreement are not complete and are qualified in their entirety by reference to the full text of the RSA and the Purchase Agreement, copies of which are filed herewith as Exhibits 10.1 and 10.2, respectively, and are incorporated herein by reference.

The information in the Cleansing Material is dependent upon assumptions with respect to commodity prices, development capital, operating expenses, backlog, availability and cost of capital and performance as set forth in the Cleansing Material. Any financial projections or forecasts included in the Cleansing Material were not prepared with a view toward public disclosure or compliance with the published guidelines of the Securities and Exchange Commission or the guidelines established by the American Institute of Certified Public Accountants regarding projections or forecasts. The projections do not purport to present the Company’s financial condition in accordance with accounting principles generally accepted in the United States. The Company’s independent accountants have not examined, compiled or otherwise applied procedures to the projections and, accordingly, do not express an opinion or any other form of assurance with respect to the projections. The inclusion of the projections herein should not be regarded as an indication that the Company or its representatives consider the projections to be a reliable prediction of future events, and the projections should not be relied upon as such. Neither the Company nor any of its representatives has made or makes any representation to any person regarding the ultimate outcome of the Company’s proposed restructuring compared to the projections, and none of them undertakes any obligation to publicly update the projections to reflect circumstances existing after the date when the projections were made or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the projections are shown to be in error.

The information included in this Form 8-K under Item 7.01 and Exhibits 99.1, 99.2, 99.3 and 99.4 attached hereto is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liabilities of that Section, unless the registrant specifically states that the information is to be considered “filed” under the Exchange Act or incorporates it by reference into a filing under the Exchange Act or the Securities Act of 1933, as amended.