Item 1.01 Entry into a Material Definitive Agreement
Securities Purchase Agreement
On November 29, 2018
(the Closing Date), McDermott International, Inc. (McDermott, we or us) completed its previously reported private placement (the Private Placement) of (1) 300,000 shares of 12% Redeemable
Preferred Stock, par value $1.00 per share (the Redeemable Preferred Stock), and (2) Series A warrants (the Warrants) to purchase 6,773,094 shares of common stock of McDermott, par value $1.00 per share (Common
Stock), with an initial exercise price per share of $0.01, for aggregate proceeds of $289.5 million, before payment of placement fees and related costs and expenses. These securities were issued pursuant to the Securities Purchase
Agreement, dated as of October 30, 2018 (the Purchase Agreement), by and among McDermott and West Street Capital Partners VII Offshore Investments, L.P. (the Initial Purchaser). Prior to the closing of the Private
Placement (the Closing), the Initial Purchaser assigned a portion of its rights and obligations under the Purchase Agreement to certain affiliates. McDermott intends to use the proceeds from the Private Placement for general corporate
purposes, including the funding of working capital requirements. Concurrently with the closing of the Private Placement, we also completed the requirements for initial availability under the previously reported $230 million letter of credit
agreement entered into on October 30, 2018.
Warrant Agreement
Pursuant to the Purchase Agreement, on the Closing Date, McDermott entered into a Warrant Agreement (the Warrant Agreement) with Computershare Inc.
and Computershare Trust Company, N.A., to, among other things, authorize and establish the terms of the Warrants, subject to certain adjustments described below. The Warrants are exercisable at any time after the earlier of (1) any Change of
Control (as defined in the Certificate of Designation relating to the Redeemable Preferred Stock) or the commencement of proceedings for the voluntary or involuntary dissolution, liquidation or winding up of the Company and (2) the first
anniversary of the Closing Date, and from time to time, in whole or in part, until the tenth anniversary of the Closing Date.
The exercise price and the
number of shares of Common Stock for which a Warrant is exercisable are subject to adjustment from time to time upon the occurrence of certain events including: (1) payment of a dividend or distribution to holders of shares of Common Stock
payable in Common Stock, (2) the distribution of any rights, options or warrants to all holders of Common Stock entitling them for a period of not more than 60 days to purchase shares of Common Stock at a price per share less than the fair
market value per share, (3) a subdivision, combination, or reclassification of Common Stock, (4) a distribution to all holders of Common Stock of cash, any shares of McDermotts capital stock (other than Common Stock), evidences of
indebtedness or other assets of McDermott, and (5) any dividend of shares of a subsidiary of McDermott in a
spin-off
transaction.
The foregoing description of the Warrant Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the
Warrant Agreement, which is filed as Exhibit 4.1 to this Current Report on Form
8-K
and incorporated herein by reference.
Registration Rights Agreement
Pursuant to the Purchase
Agreement, on the Closing Date, McDermott entered into a Registration Rights Agreement with the holders of the Warrants (the Registration Rights Agreement). The Registration Rights Agreement grants the holders of the Warrants certain
registration rights for the shares of Common Stock issuable upon the exercise of the Warrants. The Registration Rights Agreement provides that McDermott will use its commercially reasonable efforts to prepare and file a shelf registration statement
with the U.S. Securities and Exchange Commission (the SEC) within 90 days after the date of the Closing and to cause such shelf registration statement to be declared effective as soon as practicable after its filing (but in any event by
the first anniversary of the Closing Date) to permit the public resale of registrable securities covered by the Registration Rights Agreement.
McDermott
will generally be required to effect registrations for up to two underwritten offerings, provided that any such offering involves at least $25 million of registrable securities. McDermott has generally agreed to pay the related registration
expenses and has also agreed to indemnify the holders of the Warrants for certain liabilities arising from such registrations.