McDermott International Inc. is being investigated by the Securities Exchange Commission over disclosures about projected losses at Cameron LNG, the Wall Street Journal reports.
McDermott disclosed in its recent third-quarter earnings report that it had received a letter and subpoenas from the SEC in July notifying the company it was being investigated over disclosures about projected losses surrounding the Hackberry project.
Cameron LNG is being built as a joint venture between McDermott and Japan’s Chiyoda Corp.
In the securities filings, McDermott cites poor labor productivity and increases in contractor and subcontractor costs at the project. According to the filing, the company realized nearly $170 million in changes to cost estimates on the project, resulting from “poor labor productivity” and rising construction and subcontractor costs that were partially offset by “incentives related to projected achievement of progress milestones.”
According to the Wall Street Journal, McDermott neglected to disclose the SEC investigation until after investors lent the company $1.7 billion in rescue financing. According to the newspaper, McDermott is suffering from a series of operational setbacks and a depressed offshore drilling sector. The company has been negotiating with creditors on how to fix its balance sheet and had hired law firm Kirkland & Ellis LLP to advise it on debt restructuring options.
In 2018, McDermott completed a merger with Chicago Bridge & Iron, or CB&I, which had acquired the Baton Rouge-based Shaw Group five years earlier.
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