Shares of McDermott International Inc. tumbled 15% in premarket trading Tuesday, after the provider of engineering and construction services to the energy industry announced a prepackaged bankruptcy as part of a restructuring that eliminates $4.6 billion of debt. The company said the bankruptcy will be financed by a debtor-in-possession (DIP) financing facility of $2.81 billion, and that it has secured over $2.4 billion in letter-of-credit facility capacity. The company said it expects to emerge from bankruptcy with about $500 million in funded debt. As part of the DIP agreement, McDermott will sell its Lummus Technology business for $2.73 billion, with the proceeds from the sale expected to be used to repay the DIP financing in full. McDermott expects its stock to be delisted from the NYSE within the next 10 days. The stock is proposed to be cancelled as part of restructuring. McDermott’s stock had plummeted at the end of 2019, with The Wall Street Journal reporting that McDermott had been in talks with its lenders for a bankruptcy filing within weeks. McDermott shares have lost 92.2% of their value over the past 12 months through Friday, while the SPDR Energy Select Sector ETF has declined 7.4% and the S&P 500 has gained 24.7%. Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.
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