Houston-based McDermott confirms oilfield service company will file for bankruptcy

McDermott International will file for Chapter 11 bankruptcy later today, the struggling Houston oilfield service company confirmed. McDermott International will file for Chapter 11 bankruptcy later today, the struggling Houston oilfield service company confirmed. Photo: J. Ray McDermott Photo: J. Ray McDermott Image 1 of / 3 Caption Close Houston-based McDermott confirms oilfield service company will file for bankruptcy 1 / 3 Back to Gallery

McDermott International will file for Chapter 11 bankruptcy Tuesday, the struggling Houston oilfield service company confirmed.

In a statement released early Tuesday morning, McDermott said it would will file a prepackaged restructuring plan at the U.S. Bankruptcy Court in Houston. The plan, which has the support of two-thirds of its creditors, would allow McDermott will receive more than $2.8 billion in financing and shed $4.6 billion of debt.

As part of the restructuring plan, McDermott has agreed to sell Lummus Technology to The Chatterjee Group and Rhône Group for $2.725 billion. However, the deal must be approved by a bankruptcy judge in an auction process that could go to a higher bidder.

Service Sector: McDermott stock plummets amid rumored bankruptcy talks

McDermott's announcement ends four months of speculation that the company would file for bankruptcy. Market rumors about the company using the services of a restructuring advisory firm sent McDermott's stock price plummeting in September.

Shares of McDermott were trading $6 per share range in September but have plunged below $1 a share. The company received a delisting warning from the New York Stock Exchange to bring shares back above $1 per share threshold.

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Founded in 1923, McDermott provides design, engineering and construction services to petrochemical plants, liquefied natural gas plants and offshore oil and natural gas facilities.

With more than 32,000 employees in 54 nations, the Houston company posted a $1.9 billion loss on $2.1 billion of revenue in the third quarter.

Most of those losses are attributed to a joint venture with costly delays in completing construction contracts for the Cameron LNG export terminal in Louisiana and the Freeport LNG export terminal in Texas. Other losses are attributed to a $6 billion deal last year to buy rival engineering, procurement and construction company Chicago Bridge & Iron.

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