Davis Polk Advises Ad Hoc Group of Lenders Holding $3.2 Billion in Term Loan Claims in Connection with Confirmation of McDermott International’s Chapter 11 Plan

Davis Polk is advising an ad hoc group of term lenders (the “Ad Hoc Group”) holding (i) $1.53 billion, or about 69%, of the first-lien term loan under that certain Credit Agreement, dated as of May 10, 2018 (and all loans thereunder collectively, the “2018 Term Loans”), (ii) $1.1 billion, or about 93% of the new money term loans under the DIP facility, and (iii) $560 million, or about 69% of the rolled-up term loans under the DIP facility, in connection with the chapter 11 restructuring of McDermott International, Inc. (together with certain of its subsidiaries, “McDermott”). On January 21, 2020, the Ad Hoc Group, the prepetition LC lenders, the bondholder group, McDermott and other parties entered into a comprehensive restructuring support agreement that contemplated a prepackaged bankruptcy that would restructure McDermott’s debt and liabilities. On the same day, McDermott filed its voluntary chapter 11 petitions in the United States Bankruptcy Court for the Southern District of Texas, Houston Division.

On March 12, 2019, McDermott’s prepackaged plan of reorganization was confirmed by the U.S. Bankruptcy Court for the Southern District of Texas. The Plan provides for an equitization of approximately $4 billion of debt, with holders of the 2018 Term Loans receiving 94% of reorganized equity and $500 million of take-back debt. The Plan also envisions the sale of McDermott’s Lummus Technology business for $2.725 billion to a joint partnership between Chatterjee Group and Rhône Group (subject to higher bids and regulatory approvals) to repay the DIP facility and provide liquidity upon exit.

McDermott is a fully integrated provider of engineering, procurement, construction and installation and technology solutions to the energy industry. McDermott’s proprietary technologies and services are utilized for offshore, subsea, power, liquefied natural gas, and downstream energy projects around the world. Their customers include national, major integrated and other oil and gas companies and producers of petrochemicals and electric power.

The Davis Polk restructuring team includes partner Damian S. Schaible, counsel Natasha Tsiouris and associates Daniel Rudewicz and Richard J. Steinberg. The finance team includes partner Monica Holland, counsel Benjamin Cheng and associate Alexander Volsky. The capital markets team includes partner Nicholas A. Kronfeld. The corporate team includes partner Brian Wolfe. Partner Adam Kaminsky provided executive compensation advice. Members of the Davis Polk team are based in the New York and Washington DC offices.