The Babcock & Wilcox Company Exits Chapter 11 Bankruptcy; A Transformational Event for McDermott and B&W
February 22 2006 - 8:00AM
Business Wire
McDermott International, Inc. (NYSE:MDR) ("McDermott" or the
"Company") announced today that The Babcock & Wilcox Company
and certain of its subsidiaries ("B&W") have now exited from
Chapter 11 bankruptcy and entered into its previously announced
settlement. Accordingly, B&W's financial results will be
re-consolidated with McDermott's and its operations managed without
Bankruptcy Court supervision. "This is a transformational event for
McDermott and B&W, as well as for our shareholders, employees,
customers and suppliers," said Bruce W. Wilkinson, Chairman of the
Board and Chief Executive Officer of McDermott. "Six years to the
day since its original filing, B&W emerges at the commencement
of an exciting time in the power generation industry. Electricity
demand in the United States is growing, environmental requirements
for our customers require new technologies, coal remains an
abundant and cost-effective domestic fuel source and new power
plants are being planned. For more than 138 years, B&W has
supplied innovative solutions to the power generation industry to
meet the world's energy needs. We are looking forward to our
future, with the asbestos portion of B&W's history now behind
it." McDermott also announced today that B&W has finalized and
implemented its exit-financing package, and has funded its initial
payment to the asbestos-claimants' trust. B&W today paid $350
million and assigned rights to approximately $1.15 billion
face-amount of insurance to the claimants' trust. Depending on the
status of national asbestos legislation at November 30, 2006,
either an additional $25 million or $605 million in consideration
will be made available to the trust in the time periods required.
B&W's exit-financing package consists of three tranches for a
combined total of $650 million of credit capacity; providing ample
liquidity for letter-of-credit requirements, working capital needs
and the possibility of refinancing the $250 million contingent note
which was issued to the claimants' trust. In December 2005, Moody's
Investors Services and Standard & Poor's Ratings Services
issued newly assigned credit ratings for B&W of B1 and B+,
respectively. "With today's announcements, McDermott is
well-positioned to move forward as a worldwide energy services
company with our focus on power generation, marine construction and
government operations," continued Wilkinson. "Finally, I want to
thank Judge Brown and Judge Vance for their patience and efforts
during the six-year process, and all parties who have supported us
during this journey." OTHER INFORMATION About the Company McDermott
International, Inc. is a leading worldwide energy services company.
The Company's subsidiaries provide engineering, fabrication,
installation, procurement, research, manufacturing, environmental
systems, project management and facility management services to a
variety of customers in the power and energy industries, including
the U.S. Department of Energy. In accordance with the Safe Harbor
provisions of the Private Securities Litigation Reform Act of 1995,
McDermott cautions that statements in this press release, which are
forward-looking and provide other than historical information,
involve risks and uncertainties that may impact the Company's
actual results of operations. These forward-looking statements
include statements relating to the sufficiency of liquidity
provided by B&W's exit-financing, our optimism regarding
McDermott's position as a worldwide energy services company and
various macro-economic factors within the power generation
industry, including the growing demand of electricity, the need for
new technologies in response to environmental requirements, the
supply and cost-effectiveness of coal and the planning of new power
plants. Although we believe that the expectations reflected in
those forward-looking statements are reasonable, we can give no
assurance that those expectations will prove to have been correct.
Those statements are made by using various underlying assumptions
and are subject to numerous uncertainties and risks, including, but
not limited to, risks that adverse changes in the power generation
industry may negatively impact demand for B&W's services or
adverse changes in B&W's liquidity. If one or more of these
risks materialize, or if underlying assumptions prove incorrect,
actual results may vary materially from those expected. For a more
complete discussion of these and other risk factors, please see
McDermott's annual report for the year ended December 31, 2004 and
its 2005 quarterly reports filed with the Securities and Exchange
Commission.
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