McDermott to Proceed with $2.7bn Sale of Tech Arm
US-based McDermott International confirmed on March 3 it will push ahead with the $2.73bn sale of its technology business Lummus to a joint venture between US investment firms Chatterjee Group and Rhone Capital.
McDermott, which has struggled with mounting debt since the $6bn merger of its offshore engineering business with Chicago Bridge and Iron (CB&I) in 2018, announced in late January it would file for Chapter 11 bankruptcy protection. It also said it had entered a stalking-horse agreement to sell Lummus for $2.73bn to Chatterjee and Rhone.
In its March 3 statement, McDermott said it had not received a superior bid to Chatterjee and Rhone's offer, and a court-supervised auction previously scheduled for March 9 would not take place. A hearing on the sale will take place on March 12.
Proceeds from the divestment of Lummus will be used to settle McDermott's debtor-in-possession financing, fund emergence costs and provide cash for its balance sheet, the contractor said.
McDermott acquired Lummus in 2018 as part of its CB&I takeover. It is a licensor of gas processing, refining, petrochemical and coal gasification technologies, as well as a supplier of proprietary catalysts, equipment and related engineering services. Among its recent awards, Lummus was hired late last year to license out its ethylene production and separation technology for a $11bn gas-based petrochemical project in Russia.