Losses on a Louisiana LNG construction project and other financial stresses in recent months appear to be pushing energy contractor McDermott International closer to a bankruptcy filing, Engineering News Record reports.
The company is in talks with its lenders led by HPS Investment Partners and Baupost Group LLC for a loan of about $2 billion to keep operating during a bankruptcy filing that could come in weeks, Bloomberg reported last month.
The company, which builds oil platforms and gas-export plants, reported in November a $1.9 billion loss for its third quarter, citing “unfavorable changes in cost estimates” for EPC work on Cameron, with losses also from work on the Freeport LNG project in Texas, various petrochemical and power plant projects and an offshore oil project for Mexico oil company Pemex.
McDermott had also disclosed it was being investigated by the U.S. Securities and Exchange Commission over the projected loss disclosures that it attributes to poor labor productivity, increased contractor and subcontractor costs at the project and schedule delays. The company says it is cooperating with the SEC probe.
McDermott also faces a U.S. Justice Department probe of alleged fraudulent invoices at a now-cancelled U.S. Energy Dept. project in South Carolina that is linked to CB&I and other site vendors. 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.
