Energy engineering and construction firm McDermott International this week announced a deal with secured lenders for up to $1.7 billion in additional financing.
The new agreement allows McDermott in the near term to tap a $550-million term loan and $100 million in letters of credit, which in turn, will help the company finance its working capital and allow it to guarantee major projects.
“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,” said David Dickson, President and Chief Executive Officer of McDermott. “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.”
The lenders group is led by Barclays Bank and Crédit Agricole Corporate and Investment Bank. The interest rate is close to 10 percent for the new term loan.
The company, meanwhile, has kept busy with energy infrastructure projects. It worked with Sempra LNG to put the Cameron export facility into operation near Houston.
Earlier this year, McDermott and Calpine Corp. completed work on the York 2 gas-fired power plant in Pennsylvania.
McDermott continues to pursue the previously announced strategic alternatives process for its Lummus Technology unit–after several unsolicited bids–and the sale process for the remaining portion of the pipe fabrication business. McDermott has decided to terminate its previously announced sale process for its industrial storage tank business.